Gifts and Inheritance for NRIs: What Is Taxable and What Isn’t

India has no separate gift tax and no inheritance or estate duty. But gifts can still be taxed as income of the person who receives them, and FEMA sets limits on how gifts can move between residents and NRIs. Here are the rules.

Income tax on gifts: the basic rule

A gift of money, property or certain other assets received without payment (or for less than it is worth) is taxable in the receiver’s hands as income from other sources, unless an exemption applies. This rule was in section 56(2)(x) of the 1961 Act and is now in section 92 of the Income-tax Act, 2025.

Gifts that are fully exempt

1. Gifts from a “relative”, of any amount
2. Gifts received on the occasion of your marriage
3. Gifts received under a will or by inheritance
4. Gifts received in contemplation of the giver’s death
5. Total gifts from non-relatives of ₹50,000 or less in a year. If the total is above ₹50,000, the entire amount is taxable, not only the excess.

Who counts as a “relative”?

• Your spouse
• Your brother or sister
• Your spouse’s brother or sister
• Your parents’ brothers and sisters
• Any lineal ascendant or descendant (parents, grandparents, children, grandchildren)
• Any lineal ascendant or descendant of your spouse
• The spouse of any of the people above

Not relatives: friends, cousins, nephews and nieces (as gift-givers to you), and in-laws other than those listed above.

Common scenarios

Gifts from residents to NRIs: since 5 July 2019, a sum given by a resident to a non-resident is treated as income arising in India, so it can be taxable unless an exemption applies (for example the relative exemption).

Inherited property: tax when you sell

Inheritance itself is not taxed. When you sell inherited property:

• Cost = what the previous owner paid for it (or the fair market value on 1 April 2001, if it was bought before then)
• Holding period includes the previous owner’s holding period, so it is usually long-term
• For NRI sellers, the normal property-sale TDS and capital gains rules apply (see the property-sale article in this series)

Clubbing: gifts to your spouse

If you gift money to your spouse and they invest it, the income from that investment (interest, rent) is added to your income under the clubbing rules, even though the gift itself is tax-free.

FEMA rules: can money or property move as a gift?

• NRI to resident relative: NRIs can gift money from NRE or NRO accounts to residents.
• Resident to NRI relative: a resident can gift money to an NRI relative under the Liberalised Remittance Scheme (LRS), up to USD 250,000 per financial year, either by remitting abroad or by crediting an NRO account.
• Gifting immovable property to an NRI: a resident can gift residential or commercial property to an NRI or OCI relative. Agricultural land, farmhouses and plantation property cannot be gifted to NRIs or OCIs.
• TCS on LRS: remittances under LRS above the threshold may attract TCS, which can be adjusted against tax later.

Your country of residence

Some countries (for example the USA) have their own gift or estate tax and reporting rules for gifts or inheritances received from abroad. Check the rules where you live.

Frequently asked questions

Can I send money to my parents in India without tax?
Yes. Gifts from children to parents are exempt from tax in the parents’ hands, whatever the amount.

Is a gift deed necessary?
It is not required for gifts of money between relatives, but it is strongly recommended for large amounts as proof. A registered gift deed with stamp duty is compulsory for gifts of immovable property.

I inherited shares in India. Do I pay tax?
No tax when you inherit. When you sell, capital gains tax applies, using the original owner’s cost.

Is a gift from my cousin tax-free?
No. Cousins are not “relatives” under this definition. Gifts above ₹50,000 in a year are fully taxable.

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Planning to gift or inherit assets across borders? Garvita Jain & Co. advises on gift structuring, FEMA compliance, gift deeds and selling inherited property. Contact us here, or at contact@garvitajainandco.com or +91 98678 16597.

This article is general information based on the law as of October 2026 and is not professional advice.

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Sources

Official

• Income Tax Department, Taxability of gifts (tax-payer services pages)
• RBI, LRS Master Direction (USD 250,000; gifts to NRI relatives) (search “Master Direction – Liberalised Remittance Scheme”)

Professional / CA publications

• TaxGuru, Tax implication on gifts u/s 56(2)(x)
• TaxGarden, Gift tax s.56(2)(x), ₹50,000 threshold, AY 2026-27
• IDFC FIRST Bank, NRI gift tax rules
• Regitom, NRI gift tax rules 2026 (FEMA and documents)