Parents, beware: Gifts you get at your child's wedding can be taxed

If you're the parent, and you're receiving gifts during your kid's wedding, those aren't tax-free. They'll be treated as part of your taxable income, unless every gift came from a close relative.

Let’s talk about something most Indian families experience: gifts during weddings. You’ve probably attended a wedding where the parents of the bride or groom receive ‘shagun’ or money from friends and relatives. Sometimes it’s a token, other times, it’s quite a lot.

 

Now here’s the big question: Is that money tax-free?

 

Well, according to a ruling by the Punjab & Haryana High Court in 2013, not always. In fact, if you’re the parent and the money was given to you during your child’s marriage, you could end up paying income tax on it.

 

The man who got gifted Rs 21 Lakh

 

Meet Rajinder Mohan Lal, a Chandigarh resident who received over Rs 21 lakh as gifts from friends and family during his daughter’s wedding.

 

Sounds normal, right? He even provided proof that this was just shagun from well-wishers.

 

But when he filed his income tax return in 2007-08, he didn’t include that Rs 21 lakh. The Income Tax Department wasn’t happy — and added the amount to his taxable income.

 

Rajinder's argument: Hey, I didn’t get this money randomly — it was on the occasion of my daughter’s wedding!

 

The taxpayer argued that the word "individual" should be interpreted broadly to include gifts received during the marriage of an individual’s children, as it is customary in Indian society for parents to receive shagun or monetary gifts during such occasions.

 

"The ITAT Chandigarh ruled the wedding gift tax exemption under Section 56 applies only to the person getting married, not to their relatives. Since Rajinder was not the one getting married—his daughter was—the ₹21 lakh in gifts he received during her wedding was not exempt and was added to his taxable income. The judges concurred that the law clearly refers to gifts received "on the occasion of the marriage of the individual"—meaning the bride or groom, not their parents. The decision reinforced that wedding gifts are tax-free only when received by the couple, not by others," as per an analysis by ClearTax.

 

So, what does the law say?

There’s a section in the Income Tax Act — Section 56(2)(vi) — that says monetary gifts over Rs 50,000 are usually taxable unless they are:

 

From close relatives

• Received on your own marriage
• Or through inheritance, wills, etc.

 

The key word here? "Your own marriage."

 

Rajinder’s point was: “In India, it’s common for parents to receive gifts during their children’s weddings. So shouldn't that be tax-free too?”

 

Unfortunately for him, the court didn’t agree. 

"It is important to emphasize that the exemption for marriage-related gifts applies only to the individual whose marriage is being solemnized. For example, if an individual receives gifts on the occasion of their own marriage, such gifts are fully exempt from tax under this provision. 

 

However, if gifts are received by the individual's parents, siblings, or any other relatives in connection with that marriage, such receipts would not enjoy the exemption and would be taxable in their hands.

 

The legislative intent is clear: the tax exemption under Section 56(2)(x) of the IT Act extends solely to gifts received by the person getting married, and not to gifts received by others on account of such event," said Kunal Savani, Partner, Cyril Amarchand Mangaldas.

   

What did the judge say?

However, the High Court rejected this argument, stating that the language of the law was clear and unambiguous. The exemption applies only to the marriage of the individual assessee, not to the weddings of their children or other family members.

 

The judges looked closely at the law and said: “Sorry, the wording is clear. The exemption is for gifts received on your marriage — not your daughter’s, not your son’s.”

 

In their words:

“If the legislature meant to include children's marriages, it would have said so.”

 

The taxpayer’s appeals to the Commissioner of Income Tax (Appeals) and later the Income Tax Appellate Tribunal (ITAT) were also dismissed. The High Court, in agreement with these earlier decisions, dismissed the final appeal, concluding that no substantial question of law arose in the case. So, Rajinder lost the case — first in front of the tax officer, then in appeals, and finally in the High Court. 

Why Should You Care?

If you’re planning a wedding in the family soon — especially of your child — this is a big deal.

 

Here’s why:

 

• Many people assume that all wedding gifts are automatically exempt from tax.
• But only gifts given on your own wedding are tax-free.
• If you’re a parent receiving cash gifts during your son’s or daughter’s marriage (a common practice), you may need to declare them and pay tax — especially if they’re from non-relatives.

 

What this means for taxpayers?

This ruling serves as a critical reminder that not all wedding gifts are tax-free, especially when received indirectly.

 

 What is exempt:

• Gifts from relatives
• Gifts received on your own marriage
• Inheritance or gifts via will

 

 What is taxable:

• Gifts received on the marriage of your children or others
• Monetary gifts from non-relatives above Rs 50,000 not falling under exemptions

 

A guideline for your tax exemptions, as explained by ClearTax:

 

• Although gifts are tax-exempt, any income derived from them is not. What this means for you:
• Rental income from a gifted property is taxable under 'Income from House Property'
• Interest earned on gifted cash deposits is taxable under 'Income from Other Sources."
• Capital gains from sale of gifted assets ( like jewellery and property) are taxable, with the cost of acquisition being the original cost to the donor.

  How this applies to wedding gifts: When a father gifts his daughter a car worth Rs 1 crore on her wedding, the car is definitely exempt from tax. But when the daughter rents out the same car and earns a rental income, her earnings on the gift now become taxable. 

Pallav Pradyumn Narang, Partner, CNK, explains in detail: 

Under Indian tax laws, gifts received by an individual on the occasion of their marriage are exempt from income tax, regardless of the value or the identity of the donor. However, it is important to note that the term "individual" for this purpose is interpreted in a very narrow and literal sense—it refers only to the bride and the groom who are legally entering into matrimony. The exemption does not extend to their family members, relatives, or others, even if the gifts are clearly connected to the marriage celebrations.

 

This has practical implications. 

 

Illustration:

Let’s say Mr. A is hosting the wedding of his daughter, B, who is marrying C. If a family friend or relative gifts Mr. A a solitaire ring worth ₹2 lakhs on the occasion of the wedding, the gift is not exempt. Since Mr. A is not the one getting married, and assuming the gift is from someone who does not fall under the definition of “relative” under the Income Tax Act, the entire amount (not just the amount above ₹50,000) will be taxable as income in Mr. A’s hands under the head “Income from Other Sources”.

 

Further, the exemption is strictly tied to the legal concept of marriage as recognized under Indian law. This creates challenges in the case of same-sex couples or LGBTQ+ unions, which, as of now, are not recognized as legal marriages in India. Therefore, any gifts received by such couples on the occasion of their union will not enjoy the marriage-based gift tax exemption, and such gifts will be fully taxable if they cross the threshold limit and are received from non-relatives.