Exchanging gifts are the part of Diwali 2025. But are they come under tax rules? Many people are not totally aware about some rules related to tax and gifts.
As Diwali approaches, there’s more talk about gifts. Gift-giving is a common practice on this occasion. People gift gold jewelry, coins, and bars, among other things. However, most people don’t realize that not all gifts are tax-free. Therefore, it’s important to understand the tax rules before giving or receiving gifts this Diwali.
What are the rules
Section 56(2)(X) of the Income Tax Act outlines the tax rules on gifts. It states that gifts are taxable if their value exceeds a certain threshold. If you give gifts to non-relatives, gifts up to ₹50,000 in a financial year are exempt from tax. “Gold gifts do not qualify for any Diwali exemption. Gifts received from non-relatives on Diwali are subject to the same rules as general gifts. This means that if the combined value of all gifts in a financial year is up to Rs 50,000, they will not be taxed,” said Alay Rajvi, Managing Director, Accord Juris. Ritika Nayyar, partner at Singhania & Co., said that if the market value of the gifts exceeds ₹50,000, the entire amount will be taxable. This tax will be borne by the person receiving the gift. The value of the gift will be considered “income from other sources” and will be taxed according to the tax slab of the person receiving the gift.
Comments from experts
Supreme Court lawyer Tushar Kumar said, “Gifts received from certain relatives are tax-free. Such relatives include parents, spouse, and siblings. If you receive a gift from one of these relatives, it will not be taxable, regardless of the value of the gift.” Since it’s common to give gold or silver jewelry on Diwali among very close relatives, they don’t need to worry about tax on the gift. However, it’s important to consider your relationship with the person giving the gift.
Gifts received from an employer fall under the head ‘income from salaries’. P Narang, partner at CNK, said, “Gold vouchers up to Rs 5,000 received from an employer are not taxable. However, if the value of the gift exceeds Rs 5,000, it will be taxable. The employer will have to include it in Form 16 and deduct TDS on it.” It is important to understand and remember these rules. If you do not disclose taxable gifts in your income tax return, you may be liable for a penalty.