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I gave some money to my relative (my wife's sister's husband), few lakhs twice or thrice this year
Your saying:
1. This was just a gift to him
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Any amount received by relatives is not taxable at all in the hand of recipients. In your hands this gift amount might have been taxed or exempted within the limitations of Income Tax Action. Else if donated amount proved to be taxable then tax authorities have right to follow the gifted amount in what ever form it is converted by done.
Provision reads as under: Section 56 of Income tax Act 1961( Income from Other sources)
Any amount received from specified relatives is totally tax free in the hands of recipient. So if a relative gives you gift in form of cash/cheque or in consideration, you will not have to pay any tax on the amount received. 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
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However you as donor (giver) has to establish his source of income while confirming the giving of gift. (In other words you have to show the proof as Donor that the amount so.. given is your legitimate income which either taxed or exempted. As far as you make the transactions which can be justified, there is not much to worry, It is a good and safe practice to document things on a paper with proper signatures.
This will help you because income tax scrutiny can go back to many years of your life. The stronger your documentation and proof, the smoother will the situation be.
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