Income Tax Return: Did you know that the process for filing Income Tax Returns (ITR) has begun? Amidst this process, several key questions are arising in people’s minds. If you have received money from your parents or siblings, must it be disclosed in your ITR? Failure to do so could even result in receiving a notice from the Income Tax Department.
In fact, confusion has increased following changes made to the ITR forms this year. It is important to understand the tax rules regarding gifts or money received from relatives. You can find the relevant details below.
Is money received from relatives taxable?
According to income tax laws, gifts received from parents, a spouse, siblings, and certain other close relatives generally do not fall under the tax net. There is no monetary limit for this; for instance, if parents provide a large sum to purchase a house, or if siblings offer financial assistance, that amount is not subject to tax.
Money received from which relatives is tax-free?
Income tax regulations classify certain individuals as “specified relatives.” These include a spouse, parents, grandparents, children, grandchildren, siblings, a spouse’s siblings, and parents’ siblings. Any gift received from these relatives is considered tax-free.
Why has confusion arisen regarding ITR forms?
In previous years, taxpayers could report certain non-taxable income under the “Other Exempt Income” section. However, the new ITR forms for Assessment Year (AY) 2026-27 do not provide a separate column for gifts received from relatives. Consequently, many people are wondering if reporting this has now become mandatory or if the rules have changed.
Is it mandatory to disclose this in the ITR?
Currently, there is no specific section in the ITR where gifts received from relatives must be mandatorily disclosed. This is because such gifts are not tax-free due to a specific exemption; rather, under the law, they do not fall into the category of taxable income in the first place. Retaining documents remains essential
Even though such gifts are not subject to tax, maintaining records is crucial. Should the Income Tax Department inquire about a significant transaction in the future, you must have the relevant documentation on hand. This may include the gift deed, proof of identity for both the donor and the recipient, proof of relationship, and details regarding the bank transfer.
What should be done upon receiving a large gift?
If you have received a substantial sum as a gift and used it to purchase a house, land, or other major assets, maintaining proper records can help you avoid future tax-related complications. If necessary, this amount can also be disclosed in your balance sheet or other relevant financial statements.
What is the most important point?
There is no need to worry about gifts received from relatives. Such gifts are generally tax-free; the absence of a specific reporting column for them in the new ITR forms does not imply that they have become taxable. However, in the case of large transactions, it is vital to maintain robust documentary records so that the source of funds can be easily substantiated if required.