New Delhi, July 29 -- Receiving cash, property, shares or other assets worth more than Rs.50,000 from a non-relative as a gift is treated as taxable income under Section 56(2)(x) of the Income-tax Act, 1961. This often comes as a surprise to taxpayers who assume that gifts are always tax-free.

These taxable gifts must be reported under the head "Income from other sources" and are taxed at slab rates. However, the law also provides an important relief that can significantly reduce, and in some cases eliminate, the tax liability arising from such gifts.

Here, we discuss the situations in which gifts do not attract tax, or where the resulting tax liability can effectively be reduced to zero, even if they are received from friends or relati...