Budget 2026: Make gifts up to ₹1.5 lakh tax-free, suggests expert

Under the current tax rules, gifts worth over ₹50,000 are subject to taxation as 'Income from Other Sources'. This limit has not been increased since 2006. Ahead of Budget 2026, a tax expert says the tax-free limit for gifts should be increased to at least ₹1.5 lakh.

"In accordance with Section 56(2)(x) [corresponding section 92(2)(m)] of the IT Act, if any person receives any property on or after 1 April 2017, without consideration or for consideration which is less than the aggregate fair market value by an amount exceeding ₹50,000, the difference shall be subjected to tax under the head ‘Income from Other Sources’ in the hands of the recipient," said CA Dr Suresh Surana.

"The existing threshold limit of ₹50,000 under this section was last revised in the Budget 2006 (which was earlier covered in section 56(2)(vi). Thus, considering the inflation and increased cost of living, the threshold limit should be enhanced to ₹1,50,000," he added.

Finance Minister Nirmala Sitharaman will present Union Budget 2026 on Sunday, February 1, 2026.

As per Section 56(2)(x) of the Income-tax Act, 1961, 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 total value of such receipts is more than ₹50,000 during a financial year.

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

However, 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.