ITR Filing FY 2025–26: How Much Money Can You Gift to a Family Member Tax-Free in India?

Whether you're transferring money to your children for education, giving a lump sum to ageing parents for their well-being, or simply helping a sibling during a tough phase, it's important to understand how such gifts are treated under Indian tax laws. 

One of the most common concerns is: How much can you gift to a family member without attracting tax liability or scrutiny during FY26 income tax return (ITR) filing? 

Let’s break down the rules, exemptions, and real-world scenarios.

Gifts from Family Members Are Tax-Free

Under the Income Tax Act, any amount of money received from specified family members is fully exempt from tax regardless of the value.

Who Qualifies as a “Family Member” for Tax Purposes?

For tax exemption purposes, the law defines family members (technically referred to as “relatives”) as:

• Spouse
• Parents (mother or father)
• Siblings (brother or sister)
• Children
• Grandparents and grandchildren
• Lineal ascendants or descendants of the individual or the spouse

So, for example, if you receive ₹5 lakh from your sister, or gift ₹10 lakh to your son, there is no tax liability on the gift amount in either case.

Income Generated from the Gift May Be Taxable

While the gift itself is exempt when exchanged with a family member, any income generated from it can be taxed, depending on how it’s used.

Example: 
If you receive ₹5,00,000 from your father and invest it in a fixed deposit (FD), the interest income earned will be taxable in your hands. 

What About Gifts from Non-Family Members?

If you receive money from someone who does not fall under the definition of a family member, and the total value of gifts exceeds ₹50,000 in a financial year, then the entire amount becomes taxable under “Income from Other Sources.”

Record-Keeping and ITR Filing Tips for FY26

• Document your gifts: Use a gift deed or maintain a bank record to prove it was a gift and not a loan.
• Report exempt income: While gifts from family members are tax-free, you should still disclose them under the “Exempt Income” section of your ITR.

Read More: ₹25 Lakh Gift from Parents: Do I Need to Pay Tax?

Conclusion

As long as you're giving or receiving money from immediate family members defined under tax law, there’s no upper limit on tax-free gifts. However, how that money is used and who earns income from it can still have tax implications.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.