I reside in Singapore and am a non-resident Indian (NRI). During the financial year 2025-26, I received a certain sum of money as a gift from my nani (grandmother) out of her love and affection towards me. The amount was transferred through normal banking channels and was not linked to any professional or business arrangement. The gift was made voluntarily for personal and family reasons, and there was no expectation of repayment or consideration involved. Will this gift be taxable in India?
—Name withheld on request
Although the Income-tax Act, 1961 (ITA 1961) has been replaced by the Income-tax Act, 2025 (ITA 2025) with effect from 1 April 2026, the gift transaction under consideration was undertaken during FY 2025-26.
Accordingly, the provisions of Income-tax Act 1961 would apply in the present case. This is because the taxability of a transaction is generally determined based on the law applicable during the relevant financial year in which the transaction took place.
Under the Income-tax Act, 1961, gifts received from certain ‘relatives’ are exempt from tax in India, irrespective of the amount involved or the mode of transfer.
In the case of an individual, the term ‘relative’ includes any lineal ascendant or descendant of the individual.
While ITA 1961 did not expressly clarify whether the term covered maternal as well as paternal relatives, there are judicial precedents supporting the view that the expression includes both maternal and paternal lineal ascendants and descendants.
Accordingly, you may claim that the gift received from your grandmother qualifies as a gift from a relative and, therefore, would not be taxable in India in your hands. It would, however, be advisable to maintain supporting documentation such as bank transfer records and a simple gift declaration or confirmation from your grandmother for record-keeping purposes.
Separately, the Income-tax Act 2025 has now specifically clarified that the lineal ascendants and descendants of an individual include both maternal and paternal relatives.
This amendment removes any ambiguity that existed under the earlier law and provides greater certainty to taxpayers receiving gifts from family members on either side of the family.
Harshal Bhuta is a partner at P. R. Bhuta & Co. Chartered Accountants
