Gift tax rules in India is quite elaborate and people sending or receiving gifts need to be conversant with it to avoid paying penalties. The rule is quite clear on the fact of the gift tax rate, which does not charge anything up to the limit of Rs. 50,000 on an annual basis. However, if a person receives gift in cash or kind in a year exceeding the upper limit, then they have to pay the tax on gift for the entire amount and not just the amount exceeding the upper limit. The entire amount adds up to the total income of that person and become payable according to the relevant income tax slab.