Many elderly individuals rely on financial support from their children or relatives to manage their monthly expenses. A similar situation was shared by Harish Gupta from Ghaziabad, who depends on his nephew for his living costs. According to him, his nephew transfers about ₹60,000 every month to help him meet household expenses. His biggest concern is whether this monthly amount is taxable under India’s income tax rules. To address this, Moneycontrol consulted noted tax expert and Chartered Accountant Balwant Jain.

His explanation sheds light on how gift taxation works in India, who needs to pay tax, and which relationships are exempt from these rules. Here’s a detailed breakdown.

Under the Income Tax Act, monetary gifts received by an individual can become taxable if they exceed a certain limit. If the combined value of all gifts received in a financial year crosses ₹50,000, the entire amount becomes taxable. This amount is then added to the recipient’s income and taxed as per their applicable income tax slab.

It is also important to note that the tax liability falls entirely on the person receiving the gift, not the one giving it. So, regardless of the value of the gift, the giver is not required to pay any tax.

However, if the total value of gifts received during a financial year remains ₹50,000 or below, then no tax is levied.

While the ₹50,000 threshold applies to most individuals, the law provides complete exemptions for gifts received from certain specified relatives. These are classified as "relatives" under Section 56 of the Income Tax Act.

According to CA Balwant Jain, gifts from the following relatives are fully exempt from tax, regardless of the amount:

• Parents




• Siblings




• Spouse




• Grandparents




• Children




• Certain extended family members, such as maternal uncle and aunt (mama–mami) or paternal uncle and aunt (chacha–chachi)

In these cases, even if the gift amount exceeds ₹50,000 or runs into lakhs, no tax is required to be paid by the receiver.

However, nephews and nieces are not included in the definition of "specified relatives." This is a crucial point.

This means:

• If a nephew or niece receives a gift from an uncle or aunt, it is tax-free.




• But if an uncle or aunt receives a gift from a nephew or niece, the amount becomes taxable if it exceeds ₹50,000 in a year.

In Harish Gupta’s case, since he is the uncle receiving money from his nephew, the exemption for specified relatives does not apply.

Since Mr. Gupta’s nephew sends him ₹60,000 every month, the total annual amount comes to ₹7.2 lakh. Because this gift amount is clearly above the ₹50,000 limit, it is treated as taxable income for Mr. Gupta.

However, CA Jain highlights an important relief:

Although the entire amount becomes taxable, Mr. Gupta may not actually have to pay any tax due to the rebate under Section 87A of the new tax regime.

Currently, under the new tax regime:

• If total taxable income does not exceed ₹12 lakh in a financial year,




• The taxpayer is eligible for a rebate that brings their tax liability down to zero.

Since Mr. Gupta’s annual taxable income from the money received (₹7.2 lakh) does not exceed ₹12 lakh, he qualifies for the Section 87A rebate.

Even though the amount is treated as taxable income:

• He does not have to pay any tax,




• Because the rebate cancels out the tax liability entirely.

If your nephew sends you money regularly for your expenses, the amount may technically be considered taxable income if it exceeds ₹50,000 in a financial year. Since nephews and nieces are not included in the list of specified tax-exempt relatives, the gift exemption does not apply.

However, depending on your total annual income and the tax regime you choose, you may still end up paying zero tax due to rebates available under Section 87A.