Got a Gifted Property? Know Tax, Stamp Duty & Capital Gains Rules
Tax Rules, Stamp Duty & Capital Gains on Gifted Property Explained
We all know we have to pay certain types of taxes when we buy or sell a property. But what if the property is not purchased, rather gifted? Do we have to pay taxes in that case too? In this blog, we will understand gifted property tax in India and when it is applicable.
What is considered a gifted property
A property is considered gifted in India only when it does not involve any monetary transaction. The property is voluntarily given and documented through a gift deed, which shows that the property has been officially transferred without any monetary involvement.
Now let’s understand the taxations with a scenario
Taxes on Gifted Properties in India
When you don’t have to pay Income tax on property received as gift
Now suppose your father bought a property in 2010 for 20 lacs and gifted it to you in 2025.
When your father gifts his property to you, there is no taxation involved except for a nominal stamp duty fee. For example, in UP it is just 5,000, and in Haryana, it is free. This duty varies from state to state, so it is important to verify as per your state’s guidelines.
After paying the nominal stamp duty fee, the property needs to be registered. During registration, you generally have to pay a 1 to 2 percent fee on the total sale value consideration, which is called registrar fees.
But apart from that, you do not have to pay any kind of tax when you receive a gifted property from a close or blood relative.
But remeber this exemption is only for blood reletives like:
Under Section 56(2)(x) of the Income Tax Act: Gifts (movable or immovable) from relatives are fully tax-exempt, irrespective of the property's value.
Definition of "relative":
• Brother-in-law / Sister-in-law's spouse (not directly covered)
• Godparents / Godchildren
• Step-relatives (e.g. step-siblings or step-parents)
• Colleagues, boss, employee
• Neighbours
• Distant relatives (not listed in Income Tax Act)
• Anyone unrelated by blood or marriage legally
No tax is payable, even if the property value is 1 crore or more.
When you have to pay tax
You have to pay tax on gifted property when you sell it or receive it from Non blood relavtive like:
• Friend (even a close family friend)
• Fiancé / Fiancée
• Live-in partner
• Cousin (maternal or paternal side)
• Nephew / Niece (sister’s or brother’s children)
• Uncle / Aunt (not your parent’s real sibling)
• Father’s cousin / Mother’s cousin
• Son-in-law / Daughter-in-law
(note: these are relatives if it's your child's spouse, but not if they are your spouse’s relatives)
• Brother-in-law / Sister-in-law's spouse (not directly covered)
• Godparents / Godchildren
• Step-relatives (e.g. step-siblings or step-parents)
• Colleagues, boss, employee
• Neighbours
• Distant relatives (not listed in Income Tax Act)
• Anyone unrelated by blood or marriage legally
If the property is not gifted by a close or blood relative, then you have to pay tax as per your income tax slab rate.
In such cases, the full stamp duty of around 5 to 7 percent is also applicable, along with the registration charges. The value of the gifted property will be added under income from other sources and taxed accordingly.
Now, what happens if you decide to sell the gifted property…
When you sell a gifted property, tax implications
Now suppose you sell a gifted property received from your father, which was purchased by him in 2010 for 20 lacs, and you sold it in 2025 for 50 lacs. In this case, you have to pay long-term capital gains (LTCG) tax on the profit.
Now understand this.
As you are selling the property, you are liable to pay LTCG tax. If the person who receives the gifted property (the donee) sells it after holding it for more than 24 months, the profit will be taxed as long-term capital gains at a rate of 12.5%. If the property is sold within 24 months, the profit is treated as short-term capital gains and taxed at 20%.
However, if the property was originally acquired before July 23, 2024, the donee (you) can choose to use the indexation benefit, which adjusts the purchase price for inflation. If you opt for this, the tax rate becomes 20%, but indexation may reduce your overall tax burden.
For indexation benefit, as per Section 49 of the Income-tax Act, 1961, the date of acquisition is considered as 2010—when your father purchased the property—not 2025 when he gifted it to you. This is because the monetary transaction took place in 2010, not at the time of gifting.
To know more, read my blog about indexation and its calculation.
In short, receiving a property as a gift from a close relative in India is mostly tax-free, except for some small charges like stamp duty and registration fees. But if it's from a non-relative, it can be taxed as income. Later, if you sell the property, capital gains tax will apply. However, using indexation can reduce your tax. Always check the rules and consult a tax expert if needed.
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