Uncle-to-nephew gifts are exempt, but the reverse isn’t: Here’s why

Though the gifts received from maternal and paternal uncle and aunts are not to be treated as income of the niece and nephew but gift received from niece and nephew by the uncle and aunts are treated like any other gifts.

Balwant Jain

December 08, 2025 / 08:10 IST

Taxability rules for gifts by relatives

Many people rely on financial help from family, but not all gifts are exempt from tax. Today's Ask Wallet Wise query decodes when money received from relatives becomes taxable as your income.Moneycontrol’s Ask Wallet-wise initiative offers expert advice on matters related to personal finance and money-related queries. You can email your queries to askwalletwise@nw18.com, and we will try and get a top financial expert to address your queries.I am 60 and retired, and under financial stress. My nephew sends me around Rs 60,000 every month to help me meet my family expenses. I have no other source of income as I have lost all my savings in speculation. Do I have to pay tax on the amount received from my nephew? Is it considered my income?

Expert's Advice: After the abolition of the gift tax, where the donor was taxed now the taxation of gifts is recipient recipient-based. In case the aggregate value of gifts received from all the sources exceeds Rs 50,000, the same is treated as income of the recipient and the same gets taxed at the slab rate applicable to him. There is no tax liability for the donor in respect of the gifts made by him, irrespective of the amount of gifts made by him.

Gifts received are fully tax-free as long as the aggregate value of all the gifts received by a recipient from all sources during the financial year does not exceed Rs 50,000. Once the aggregate value of the gifts exceeds the threshold of Rs 50,000, the full value of all the gifts becomes taxable in the hands of the recipient.

The above general rules of taxing the recipient for gifts received by him have certain exceptions. One of the exceptions is gifts received from certain specified relatives, which are tax-free without any upper limit. Maternal and paternal uncles and aunts are covered within the definition of specified relatives. The exemption for gifts received from specified relatives does not work two ways in this relationship.

Though the gifts received from maternal and paternal uncles and aunts are not to be treated as income of the niece and nephew but gifts received from the niece and nephew by the uncles and aunts are treated like any other gifts, as niece and nephew are not covered within the definition of specified relatives.

As the aggregate value of gifts received by you from your nephew exceeds the threshold of Rs. 50,000 in the financial year full amount of gifts received by you during the year from your nephew will be treated as your income and become taxable in your hands. In case your taxable income, including these gifts, does not exceed 12 lakhs, you will not have to pay any tax due to the rebate available under Section 87A under the new tax regime.