How much of your Diwali cash gifts are tax-free and how much can you keep at home? Explained

• How much cash can you receive as Diwali gift without tax implications?

• How much cash is safe to be kept at home without attracting tax troubles?

Here's what Dr Surana says about both queries:

Cash as Diwali 2025 gift

Section 56(2)(x) of the Income-tax Act, 1961 provides that any sum of money received by an individual without consideration from a non-relative is taxable under the head “Income from Other Sources” if the aggregate value of such receipts exceeds ₹50,000 during a financial year.

Accordingly, cash gifts received from friends, colleagues, or other non-relatives during Diwali or on any other occasion will remain exempt from tax up to an aggregate limit of ₹50,000 in a financial year. If the total value of such gifts exceeds this threshold, the said amount becomes taxable.

On the other hand, cash gifts received from specified relatives (such as parents, siblings, spouse, lineal ascendants or descendants, etc.) are fully exempt from tax, irrespective of the threshold. Gifts received on the occasion of marriage are also excluded from taxation, but this exemption does not extend to other festivals such as Diwali.

Cash at home holding limit

With regard to cash kept at home, there is no specific limit prescribed under the Income Tax Act.

However, the taxpayer should be able to demonstrate that the cash is from legitimate and explained sources, such as disclosed income, bank withdrawals, or exempt receipts.

In the event of a search or scrutiny, any unexplained cash found may be treated as unaccounted income under Section 69A and taxed at the applicable rates, along with interest and penalty.

"Therefore, while there is no statutory cap on the amount of cash one can hold at home, it is prudent to maintain proper records of withdrawals or receipts and to ensure that the amount of cash held is reasonable and in line with disclosed income and financial records," says Dr Surana.

"Furthermore, in cases where the individual maintains a Balance Sheet or Capital Account, any cash reflected therein (provided it represents income that has already been disclosed and subjected to tax), can be legally held," he adds.