Picture an NRI receiving a gift worth lakhs of rupees from someone back home in India. Will it be taxable? The answer isn’t as straightforward as it may seem. Whether a gift is tax-free or taxable depends on who gave it, what the gift is, and the relevant tax and FEMA rules. Missteps can be costly, especially if the money or asset has already changed hands.
Here’s what every NRI should know before accepting a gift from a resident Indian.
Are gifts received by an NRI from a resident Indian taxable?
An NRI can receive gifts from a resident Indian. However, the tax treatment depends primarily on the relationship between the donor and the recipient.
“If the gift is received from a relative, it is completely tax-free, irrespective of the amount or asset gifted,” says CA Abhishek Soni, CEO & Co-founder, Tax2win.
And if the gift is received from a non-relative, it becomes taxable if the total value of gifts received during the financial year exceeds Rs 50,000, he adds.
For example, a Rs 25 lakh gift received by an NRI from a resident parent would be exempt from tax. In contrast, the same amount received from a friend or any other person who does not qualify as a relative would be taxable in India as ‘Income from Other Sources’.
Who is considered a ‘relative’ for gift tax purposes?
Under the Income-tax Act, the term “relative” has a specific legal meaning.
For an individual, “relative” includes the spouse, siblings, spouse’s siblings, siblings of either parent, lineal ascendants and descendants of the individual or spouse, and the spouses of these persons.
“In practical terms, parents, grandparents, children, grandchildren, spouse, siblings, many uncles and aunts, and spouses of these specified persons are covered. Friends, most cousins and distant relatives are not covered unless they independently fall within one of the specified statutory categories,” says Rahul Charkha, Partner, Economic Laws Practice.
An individual’s NRI status does not alter this definition. The exemption depends on the legal relationship between the donor and the recipient under the Income-tax Act, 2025, not on whether either person is resident or non-resident, he further explains.
How are different types of gifts taxed for NRIs?
The tax treatment varies depending on the asset being gifted.
| Type of Gift Received by an NRI | Tax base | If gifted by a specified relative | If gifted by a non-relative |
| Cash (Money / Bank Transfer) | Amount received | Fully exempt from tax | Taxable if the aggregate value exceeds Rs 50,000 during the tax year |
| Immovable Property | Stamp Duty Value (SDV) | Exempt from tax | Taxable based on the property’s stamp duty value if it exceeds Rs 50,000. |
| Specified Movable Assets (shares, securities, jewellery, bullion, artworks, etc.) | Fair Market Value (FMV) determined under the Income-tax Rules, 2026 | Exempt from tax | Taxable based on the fair market value if it exceeds Rs 50,000. Once the threshold is crossed, the entire FMV becomes taxable. |
In case of cash: “For instance, an NRI receives Rs 3 lakh from his father as a gift. The amount is exempt. However, if the same amount is received from a friend, the entire Rs 3 lakh becomes taxable under Section 56(2)(x) and will be taxable based on the slab rate of the individual,” explains Neeraj Agarwala, Senior Partner, Nangia & Co LLP.
For immovable property: The tax base is generally linked to the property’s stamp duty value.
“For example, a flat gifted by a mother to an NRI son should ordinarily be exempt. However, if a non-relative gifts a property with a stamp duty value of Rs 1 crore, the NRI may be taxed on Rs 1 crore as income from other sources,” says Charkha.
In case of shares and securities and other movable assets: “For instance, a resident gifts listed shares worth Rs 5 lakh to an NRI friend. Since the donor is not a relative and the threshold is exceeded, the fair market value of the shares will be taxable in the hands of the NRI friend at the applicable slab rate,” says Agarwala.
What are the FEMA rules for NRIs if they receive gifts from resident Indians?
While a gift may be exempt under the Income-tax Act, it must also comply with the Foreign Exchange Management Act (FEMA).
For money gifts, resident individuals should route remittances through authorised dealer banks.
“Where the gift is remitted outside India under the Liberalised Remittance Scheme, it is subject to the resident donor’s overall limit of USD 250,000 per tax year. Where rupee funds are gifted in India, they are typically credited to the NRI’s NRO account,” explains Charkha.
Such funds are not freely repatriable without authorised dealer scrutiny, tax documentation and compliance with the applicable repatriation rules.
In case of immovable property, an NRI or OCI may receive residential or commercial property in India by gift from a permitted donor. However, gifts involving agricultural land, plantation property and farmhouses remain restricted, Charkha explains.
For gifts involving shares and securities, FEMA compliance is more stringent.
Charkha further explains that a resident donor may gift shares and securities to a person resident outside India only with prior RBI approval and it will be subject to prescribed conditions, including the donee’s eligibility to hold the security, the 5% cap on paid-up capital, compliance with sectoral caps, the donor and donee being “relatives” under Section 2(77) of the Companies Act, 2013, and the annual gift value not exceeding the rupee equivalent of USD 50,000.
What reporting and documents should NRIs maintain?
If the gift is taxable, the NRI should disclose it in the Indian income-tax return as income from other sources and pay tax at the applicable rate.
If the gift is exempt because it is received from a relative, there is no separate gift-tax return. However, taxpayers should maintain adequate documentation to substantiate the exemption.
“Where money is remitted abroad to an NRI, the donor/payor may be required to fulfil remittance-related compliance obligations, including furnishing information under Forms 145 and 146, where applicable,” says Charkha.
The practical document set should therefore include: gift deed, donor and recipient identity documents, PAN, passport/OCI/NRI status proof, proof of relationship, bank statements, remittance advice, Form A2 and LRS declaration where applicable, Forms 145 and 146 where applicable, valuation report for shares or property, registered gift deed for immovable property, stamp duty and registration records, demat/share transfer documents, authorised dealer correspondence, and FEMA approvals or reporting acknowledgements where required, explains Charkha.
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