My wife is receiving a gift of 25 lakhs from her mother through a cheque. Would a promissory note be enough, or do we need a gift deed? What are the tax implications in this situation?

In India, a promissory note is not sufficient for a gift of such a large amount. You would need a registered gift deed to establish the transfer of ownership. The gift will be tax-free in the hands of your wife as it is received from her mother. However, there might be tax implications if the gift is considered a capital asset and sold later.