NRI Gift Tax Rules: Are Gifts to or from NRIs Taxable in India?

“Synopsis”

Gifting is a common practice among families, especially where loved ones live abroad. But are gifts to or from NRIs taxable in India? The answer depends on the relationship between the giver and the receiver, the type of gift, and the amount involved. This blog clears the confusion around NRI gift tax rules in India, the ₹50,000 threshold, exemptions for relatives, and when taxes apply under the Income Tax Act in 2025.

Are Gifts Received by NRIs Taxable in India?

Under Section 56(2)(x) of the Income Tax Act, any person (including NRIs) receiving gifts may have to pay tax if the total value exceeds ₹50,000 in a financial year.

However, gifts are not taxable when:

They are received from close relatives (as defined by law)
They are received on the occasion of marriage
They are received under a will or inheritance
They are received in contemplation of death of the payer
They are received from a registered trust or institution

So, NRIs receiving gifts from relatives in India (cash, property, or valuables) are generally tax-exempt.

Who Qualifies as a ‘Relative’ (for Gift Tax Exemption)?

The term ‘relative’ includes:

Spouse
Brother or sister (of the individual or their spouse)
Brother or sister of either parent
Any lineal ascendant or descendant (parents, grandparents, children, grandchildren)
Spouse of any of the above

Gifts from non-relatives are taxable if they exceed ₹50,000 in a year, whether to or from an NRI.

**Taxation for Gifts Given by NRIs to Indian Residents**

When an NRI gifts money or property to someone in India:

The recipient is taxed, not the giver.
If the recipient is a relative, the gift is not taxable.
If the recipient is a non-relative, and the gift value exceeds ₹50,000, it becomes fully taxable as “income from other sources.”

This applies to gifts like:

Cash transfers
Immovable property (like land or house)
Movable property (jewelry, shares, bonds, etc.)

Gift of Immovable Property to or from an NRI

If an NRI receives a house or land as a gift, the tax implications depend on:

Whether the donor is a relative
Whether the stamp duty value of the property exceeds ₹50,000
If yes, the full value may be added to the NRI’s taxable income in India (if from a non-relative)

For NRIs gifting property, the Indian resident receiver must report it in their return if taxable.

Foreign Gifts to Indian Residents

If an NRI sends a foreign remittance as a gift to someone in India:

It is still subject to Indian tax laws.
The receiver in India must check:
- Is the sender a relative? → No tax
- Is the total amount above ₹50,000 in a year? → Then taxable

Such transfers should be through legal banking channels, not in cash.

Gifting from Indian Resident to NRI

If an Indian resident gives a gift (money or property) to an NRI:

If the NRI is a relative, there’s no tax.
If not a relative and value > ₹50,000:
- The NRI has to pay tax in India (if liable)
- This may also involve FEMA compliance for outward remittances.

Gifts and FEMA (Foreign Exchange Management Act)

Gifts involving NRIs must follow FEMA rules, especially when:

Sending money abroad to an NRI
Gifting property or investments to NRIs

For instance:

Gifts in Indian rupees must be within the LRS (Liberalized Remittance Scheme) limits (currently $250,000/year per person)
Gifts of immovable property from residents to NRIs are allowed only under specific FEMA rules

Violations can result in penalties or restrictions by RBI.

How Should NRIs Report Gifts in Their Tax Returns?

NRIs must report:

Any taxable gift income in India (from non-relatives over ₹50,000)
Capital gains, if any, on gifted assets later sold
Disclosure of foreign assets, if required under Indian tax law

Always maintain documentation like gift deeds, remittance slips, and donor identity to justify tax-free claims.

Quick Tips to Avoid Tax Trouble

Only gift through banking channels, not in cash
Keep documentation (gift deed, relationship proof)
Don’t exceed ₹50,000 from non-relatives
Comply with FEMA rules for property or high-value gifts
NRIs should declare gifts properly in Indian ITR if required
Consult a tax advisor for cross-border gifts

Conclusion

Gifts involving NRIs whether sent or received—are subject to Indian income tax and FEMA laws. The good news is that most gifts between relatives are tax-free, even if large in value. But gifts from non-relatives exceeding ₹50,000 are fully taxable, even if only ₹1 over the limit. With the right planning, NRIs can exchange gifts with family in a legal, tax-compliant, and stress-free manner.