For the purposes of this clause, “relative” means— (i) spouse of the individual; (ii) Brother or sister of the individual; (iii) Brother or sister of the spouse of the individual; (iv) Brother or sister of either of the parents of the individual; (v) Any lineal ascendant or descendant of the individual; (vi) Any lineal ascendant or descendant of the spouse of the individual; (vii) Spouse of the person referred to in clauses (ii) to (vi);]
So according to this definition, if you put your self in to center then only Sister & her Husband is relative & no further lineal descendant of them or their spouses.
But this is not so. You have to view from the point of recipient.
So gift received from Spouses Parents Sister is exempted!!!