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Gift

radht (Self) (70 Points)

02 July 2013

Can a real nephew (Real Brothers son) settled in USA gift money to his real uncle( Chacha) by way of remittance through Western Union/ Wire Transfer for the reconstruction/renovation of the family house. Is the money received Tax free or Taxable in income TAx ?If tax free under which section of the income tax Act?

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4 Replies

sanjay singhal (CA) (987 Points)
Replied 02 July 2013

Gift from relative as defined under income tax act is tax free us 56. in yourcase it should be exempt. Other views solicited.

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CA Pooja Agarwal (Chartered Accountant) (3228 Points)
Replied 02 July 2013

The Explanation to Section 56(2)(vi) provides that the expression "relative" means:

Spouse of the individual;
Brother or sister of the individual;
Brother or sister of the spouse of the individual;
Brother or sister of either of the parents of the individual;
Any lineal ascendant or descendant of the individual;
Any lineal ascendant or descendant of the spouse of the individual; and
Spouse of the person referred to in clauses (ii) to (vi).

nephew is not included under the definition of relative. so i am afraid that it would be taxable.

views of others are welcome

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Ashish Gawade (Senior Manager) (57 Points)
Replied 02 July 2013

1) Yes it is taxable as stated by Pooja unless it is below Rs. 50,000. Nephew is not considered in the category of relative in Section 56(2)(vi).

2) But if you can transfer it to someone who feet's in the category of Relative as per section 56 than it won't be taxable. eg. Grand/great father/mother, His own father/mother, Brother /Sister, wife's borther/sister some one must be in India right.. :) :)