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Valuable guidance on gift

RAM KUMAR GUPTA (ADJUNCT PROFESSOR AND VISITING FACULTY ON BANKING & FINANCE) (485 Points)

18 March 2014

Though I know that gift is not taxable but I want to know can the follwoing gift tax transactions can attract any tax or tax on icome generatef therefrom:

1. Gift from husband to his wife and wife is house lady and having only rental income.

2. Gift from grandfather to minor grand son under guardianship of his (Minor's) mother. Will income from this gift be added to the income of his mother or father.

3. Gift from father to son or daughter in law.

4. How much amount can be gifted and how many times in the life time?

Your reply with section of rlevant tax act and logic may kinldy be sent.

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1 Replies

(Guest)

Q 1: By virtue of Section 56(2), Gift from relatives is not taxable.

Following is the list of relations which are considered as “relatives” for this

Your spouse
Your brother or sister
Brother or sister of your spouse
Brother or sister of either of your parents
Any of your lineal ascendants or descendants
Any lineal ascendant or descendant of your spouse
Spouse of the persons referred in above points

So when husband gifts any amount to wife (relative)the GIFT is no taxable.But when she invests that money and if any income is generated, it will be clubbed with husband income.

Q 2:Gift from grandfather to minor grand son under guardianship of his (Minor's) mother. Income of a minor child will be added to husband or Wife’s Income depending on whose total income is greater.64(1A)

Q 3: Gift from father to son or daughter in law. Both are your relatives, so the GIFT will not be taxed. The income of daughter in law from the investment of gift will be clubbed with your income 64(1)(vi)

Q 4: There is no limit on how much amount can be gifted and how many times in the life time as long as the amount to be gifted is offered to tax by doner( the gift is white money)