The current law
The Gift Tax Act ceased to apply to gifts made on or after 1 October 1998. Gifts are now examined under the Income-tax Act: certain sums of money or property received without consideration (or for inadequate consideration) can be taxed as income from other sources in the hands of the recipient, subject to exemptions.
Common exemptions
Transfers from specified relatives, gifts on the occasion of marriage, inheritances, and certain other categories are generally not taxed as gifts. The definition of “relative” is statutory and narrower than everyday usage. Cross-border gifts also need a FEMA overlay — a tax-exempt gift can still be a restricted capital-account transaction.
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