Indian festivals are incomplete without exchanging gifts. A lot of gifts ranging from cash, gold, diamonds, financial gifts such as shares, land etc. are exchanged between friends and families. The gifts that you receive might not always be tax free. You will be required to pay taxes on them if the gift value exceeds ₹50,000. Gifts received up to ₹50,000 are completely tax free but if this amount is breached, the whole amount of gifts become taxable. For an instance, if you have received ₹55,000 worth of gifts during a financial year, complete amount of ₹55,000 will be taxable under the head ' income from other sources.' Section 56(2) of the Income Tax provides for taxation of gifts received during the year in case aggregate value of all the gifts, whether in cash or in kind during a year, exceed fifty thousand rupees. The threshold amount of ₹50,000 applies to aggregate of gifts received during a financial year. The taxability of the gift is determined on the basis of the aggregate value of gift received during the year and not on the basis of individual gift. If the aggregate value of gifts received during the year exceeds ₹50,000, then aggregate value of such gifts received during the year will be charged to tax. Gifts exempt from tax Gifts received from relatives are exempt from tax. by virtue of Section 56 of the Income Tax Act. According to the IT Act, following persons would be considered as relative --spouse, brother or sister, brother or sister of the spouse, brother or sister of either of the parents, any lineal ascendant or descendent, any lineal ascendant or descendent of the spouse, spouse of the persons referred above. Friends do not come under 'relative' and any gifts received from them are taxable. Further, gifts received at the time of marriage are exempt from tax. But, gift received on occasions like birthday, anniversary, etc. of an individual will be charged to tax. Gifts received under will/ by way of inheritance and gifts received in contemplation of death of the donor are also tax free. How to tax immovable property received as a gift? Stamp duty of immovable property is chargeable to tax, if stamp duty value exceeds the consideration value of the immovable property by at least ₹50,000.