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Personal Finance News

Gifts from relatives are tax-free, but should you still disclose them in your ITR?

balwant jain
By Balwant Jain

3 min read | Updated on July 22, 2026, 13:57 IST

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SUMMARY

Yes, it is better to disclose even such items in the interest of transparency. This can help avoid questions later regarding the source of funds used for purchases or investments.

received money how to report in ITR

If you have already filed your ITR-1, you may file a revised return and enjoy the satisfaction of having reported the gifts received from specified relatives, although, strictly speaking, doing so is not mandatory. | Image: Shutterstock.

Received money from your parents, siblings or other close relatives this year? As taxpayers are filing their Income Tax Returns (ITRs) for FY 2025-26 (AY 2026-27), many are wondering whether these tax-free gifts need to be disclosed, especially after changes in the latest ITR utility. Here's what the rules say and why voluntary disclosure could still be a good idea.
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Today's Q&A explains such details in response to a query by a reader.

Question: I have a query regarding the reporting of gifts in the Income Tax Return (ITR). In earlier ITR utilities, gifts received from relatives could conveniently be disclosed under the "Exempt Income" schedule under the "Others" category. However, in the current ITR utility, this option appears to be unavailable, creating uncertainty regarding the appropriate place for reporting such gifts.
Though gifts from specified relatives are exempt under the Income-tax Act, I believe voluntary disclosure helps maintain transparency and may avoid unnecessary notices where the gifted amount is later invested or utilised for significant purchases.
How should gifts received from relatives be reported in the current ITR utility? Do you believe reporting such exempt gifts is advisable from a practical compliance perspective, even if not specifically mandated?
Answer: If the aggregate value of gifts received during a financial year by a person from all sources exceeds ₹50,000, the whole amount is treated as the recipient's income under Section 56(2)(x) of the Income-tax Act, 1961. However, gifts received from specified relatives are outside the scope of this provision and are not treated as the recipient's income at all.

There is a difference between a receipt being treated as exempt income and a receipt not being treated as income at all. Exempt income is income in the first place but is made exempt from tax under certain provisions of the Income-tax Act, 1961. On the other hand, a receipt that is not like income cannot be treated on par with exempt income.

You are required to report only exempt income under the EI Schedule of the Income Tax Return and not receipts that are not income at all. As explained above, gifts received from specified relatives are not treated as income in the first place. Therefore, the question of treating them as exempt income does not arise, and they are not required to be reported under the "EI" Schedule of the ITR.

It appears that the Excel utility for ITR-1 has now been modified to enable reporting of gifts received from specified relatives under the sub-category "Receipts in the nature of Income" under the main category "Other Income". Therefore, you can now report such gifts even in ITR-1.

If you have already filed your ITR-1, you may file a revised return and enjoy the satisfaction of having reported the gifts received from specified relatives, although, strictly speaking, doing so is not mandatory.

Yes, it is better to disclose even such items in the interest of transparency. This can help avoid questions later regarding the source of funds used for purchases or investments.

Have a personal finance, mutual fund, or income tax query? We will try to get them answered by experts. Write to sangeeta.ojha@rksv.in
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Disclaimer: The views and opinions expressed above are those of respective experts/commentators and do not reflect the views of Upstox. The above Q&A is only for informational purposes and should not be considered investment or tax advice from Upstox. Please consult a tax expert for your complex tax problems.

About The Author

balwant jain
Balwant Jain is a Mumbai-based tax and investment expert.

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