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Is this gift taxable?

Dushyant Vithlani (Chartered Accountant) (34 Points)

13 October 2011

Whether a gift in kind given by an Individual('Devrani') to his cousin 'Jethani' is taxable to Capital Gain Tax ?

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10 Replies

Yash Anandkumar Mandavia (Practising Chartered Accountant) (184 Points)
Replied 13 October 2011

Dear Dushyantbhai,

Interpretation of definition of gift does not cover "Jethani" & "Derani". So, the same is taxable under IFOS depending on nature, that is whether the gift is movable or immovable. When the person receiving the gift, sales the same, the question of capital gain would come into picture

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Nitesh Matta (Nothing) (198 Points)
Replied 14 October 2011

well Devrani and Jethani both are close relative.. As Gifts from relatives is fully exempt.. so i think it shud not taxable.. This is all wat i think. thanks

hitesh (Telecom Industry) (169 Points)
Replied 14 October 2011

covered under the definition of relaives, hence exempt....

CA VISHAL RANA,CS,B.Com,AMFI (Chartered Accountant in Whole Time Practice) (4354 Points)
Replied 14 October 2011

Husband's Brother/wife covered under defination of sec2(24) of relative .....so any gift recieved from relative exempt..

Sunshine (Helping All) (10575 Points)
Replied 14 October 2011

exempt as they comes under the definition of relatives.......

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Dushyant Vithlani (Chartered Accountant) (34 Points)
Replied 15 October 2011

Dear all,

First of all thank you to all for your opinion, I will like to say that in these two days I have done some studies and have taken opinion of some of the senior professionals and I am of the opinion that definition of relative does not cover gift given by a ('devrani') to her cousin 'Jethani'. As Seven different situation does not cover this relation and hence it would be taxable u/s.56 of the Income Tax Act.

If a gift given by devrani to her real jethani would be covered under the definition of relatives and hence it would be exempt.

CA.SKR (CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional) (442 Points)
Replied 16 October 2011

As per Explanation to Section - 56 (2), “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);]

Gift from 'Devrani' to 'Jethani' will be exempt being gift from a Relative provided husbands of both Devrani & Jethani are brothers. Husband of Jethani will be first covered in sub-clause (iii) mentioned above as brother of the spouse of the individual, thereafter Jethani will be covered in sub-clause (vii) as spouse of the person referred to in clause (iii) above.

Please go thru the above very carefully and you will get the answer.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 16 October 2011

Originally posted by : DUSHYANT VITHLANI
	Dear all, First of all thank you to all for your opinion, I will like to say that in these two days I have done some studies and have taken opinion of some of the senior professionals and I am of the opinion that definition of relative does not cover gift given by a ('devrani') to her cousin 'Jethani'. As Seven different situation does not cover this relation and hence it would be taxable u/s.56 of the Income Tax Act. If a gift given by devrani to her real jethani would be covered under the definition of relatives and hence it would be exempt.

good that you have improved a lot , after ge4tting touch with senior professionals, that how to express yourself, where you have used "his" to represent "females" and now corrected.

where from the comes real and virtual? devrani and jethani is a real relation only, and when both the females are not in same family and not the wives of real brothers, then this devrani and jethani relation does not takes place.

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CA Pallav Singhania (IT System Auditor) (33262 Points)
Replied 17 October 2011

Gifts from Relatives
We will start with your nearest and dearest, your family. Under the CBDT ruling you can receive any amount of gift from your relatives without paying income tax. However, there are some points we need to discuss in how the “gifts” can be received, i.e. what the Income Tax Department deems as a relative.

The following categories are tax exempt:

a. Your spouse;

b. Your brothers and sisters and their spouses;
c. Your spouse’s brothers and sisters and their spouses;
d. Brother and sister of your parents and their spouses;
e. Any lineal ascendant (parents, grandparents, children, grandchildren) or descendants (children, grandchildren);
f. Any lineal ascendant (parents, grandparents, children, grandchildren) or descendant of your spouse (children, grandchildren)

prabhakar singh (advocate) (28 Points)
Replied 03 August 2012

Unless the DEVARANI(wife of younger brother) and the JETHANI (wife of elder brother) are Sisters by full or half blood relation,that is to say that they are born from a common father and mother or where father is common but mother is not or where mother is common but father is not, any such gift from one side to otherside shall attract GIFT TAX as no clause of relation ship enumerated in section 56 shall be attracted.