India’s tax reporting framework for high-value property transactions is tightening, with a sharper focus on transparency. Under the newly introduced Rule 237 of the Income-tax Rules, 2026, gifts of immovable property above ₹45 lakh will now be captured in the statement of financial transactions (SFT).
While the taxability of gifts remains unchanged, the move signals a significant shift in compliance expectations. It will bring greater scrutiny to property transfers, even when no money changes hands, and make accurate disclosure more critical than ever.
What has changed?
Under the Income-tax Rules, 1962, SFT reporting covered only the purchase or sale of immovable property above ₹30 lakh and excluded gifts. Rule 237 of the Income-tax Rules, 2026, expands this requirement to include gifts of immovable property valued at ₹45 lakh or more, effective from the financial year 2026–27.
“This marks a shift to a more comprehensive reporting regime. It aims to enhance transparency and improve tracking of high-value property transfers,” said Sandeepp Jhunjhunwala, partner, Nangia Global.
Greater scrutiny
Such transactions will now be reported in the SFT and reflected in the Annual Information Statement (AIS).
“From a taxpayer’s perspective, high-value gift transactions will now be more visible to tax authorities and subject to data-driven scrutiny. This also enables authorities to cross-check disclosures, making accurate reporting essential, as mismatches or omissions could trigger enquiries. Importantly, if a taxable gift is unreported or wrongly claimed as exempt, the enhanced reporting system will help authorities detect discrepancies and initiate action. Overall, compliance expectations and scrutiny will rise materially,” said Jhunjhunwala.
Property gifts from specified relatives
The tax treatment of property gifts from specified relatives remains unchanged under the Income-tax Act, 2025. Gifts from relatives are fully tax-exempt regardless of value, including those received on the occasion of marriage.
“Relative” includes close family members such as a spouse, siblings, parents, grandparents, children, and their spouses.
Gifts from non-relatives
A property gift from a non-relative is taxable if the stamp duty value exceeds ₹50,000, with the entire value taxed under “Income from Other Sources” at slab rates.
However, gifts received on the occasion of marriage are fully exempt, regardless of value, even if a non-relative gives them, provided they are clearly linked to the marriage. Proper documentation is important to support this claim.
“While the gift itself may be exempt, any income generated from it, such as rent, is taxable. Taxpayers should ensure appropriate disclosure of such transactions in their income tax returns, irrespective of whether the gift is taxable or exempt,” said Jhunjhunwala.
Even underpriced transactions with a non-relative are taxed. “For instance, if a ₹10 lakh property is bought for ₹2 lakh, the ₹8 lakh difference is taxable,” said Vishwas Panjiar, managing partner, SVAS Business Advisors LLP.
PAN requirement
Permanent Account Number (PAN) is mandatory for property transactions exceeding ₹45 lakh. For property transactions between ₹20 lakh and ₹45 lakh, a new Form 97, similar to the earlier Form 60, must be submitted to the registering authority.
Gifting to reduce tax burden
Families sometimes use gifting to shift income-generating assets to members in lower tax brackets. However, doing so will not be beneficial if the assets are transferred to a spouse or minor children because clubbing provisions will apply in those cases.
“In some cases, recipients may also use accumulated capital losses to offset gains arising from the eventual sale of gifted property, again subject to clubbing rules. Additionally, taxpayers may structure transactions to claim capital gains exemptions on sale and reinvestment, within the framework of applicable tax provisions,” said Sureshkumar S, partner, Deloitte India.
Points to remember
When a person receives property as a gift from a specified relative, which is non-taxable, the recipient inherits the donor’s cost of acquisition and holding period. Capital gains on a future sale will be calculated based on the donor’s original purchase price, not the stamp duty value at the time of the gift.
“Additionally, a 1 per cent TDS (tax deducted at source) applies if the property is sold for more than ₹50 lakh. Also, clubbing provisions may apply where property is gifted to a spouse or a son’s wife. Any income arising from such property could be taxed in the hands of the donor,” said Panjiar.
When gifting a property, ensure that you execute a valid gift or settlement deed with the correct PAN details. “You also need to properly record the transfer by reducing the property’s cost from your capital account, and discontinue reporting the asset in your income tax return, wherever applicable, once the transfer is complete,” said Sureshkumar.
The writer is a Delhi-based independent journalist
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