Meaning of Relative as per Income Tax Act 1961

Aishna Kukreja | Last updated: 25 March 2020

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The Income Tax Act, 1961, defines a 'relative' in relation to an individual as their spouse, siblings, parents, children, grandparents, grandchildren, and their spouses. This definition is crucial for understanding tax exemptions on gifts. Gifts received from individuals falling under this definition are generally not taxable as 'Income from Other Sources', provided certain conditions are met, particularly regarding the aggregate value of gifts received.

As per Section 2(41) of the Income Tax Act, 1961 "relative", in relation to an individual, means the husband, wife, brother or sister or any lineal ascendant or descendant of that individual.

The definition is explained further in Section 56(2)(vii) under which, it is cleared that Gifts received from relatives are not chargeable under Income from Other Sources, further clarifying that they are not taxable. This is valid for gifts received through any sum of money or property received by an individual or on or after 01-04-2017.

As per this section, the term "relative" stands for:

In case of any individual:

1. Spouse of the individual
2. Brother or sister of the individual
3. Brother or sister of the spouse of the individual
4. Brother or sister of either of the parents of the individual
5. Any lineal ascendant or descendant of the individual
6. Any lineal ascendant or descendant of spouse of the individual
7. Spouse of the person referred in point 2-6 above

In case of an HUF:
Any member of the HUF

As per this definition, there may be 33 instances under which gift is not taxable in case of an individual from point 1 to 6. In addition to that, gift from spouse of the individuals from point 1 to 6 are also exempted:

Meaning of Relative Under Income Tax Act 1961

S.NO.	NAME OF THE RECEPIENT	RELATED TO POINT NO.
1	Husband/Wife of the individual	1
2	Brother of the individual	2
3	Sister of the individual	2
4	Brother of Husband/Wife of the individual	3
5	Sister of Husband/Wife of the individual	3
6	Brother of the Father of the individual	4
7	Sister of the Father of the individual	4
8	Brother of the Mother of the individual	4
9	Sister of the Mother of the individual	4
10	Father of the individual	5
11	Mother of the individual	5
12	Son of the individual	5
13	Daughter of the individual	5
14	Grandfather of the individual	5
15	Grandmother of the individual	5
16	Great-grandfather of the individual	5
17	Great-grandmother of the individual	5
18	Grandson of the individual	5
19	Granddaughter of the individual	5
20	Great-grandson of the individual	5
21	Great-granddaughter of the individual	5
22	Father of the spouse of the individual	6
23	Mother of the spouse of the individual	6
24	Son of the spouse of the individual	6
25	Daughter of the spouse of the individual	6
26	Grandfather of the spouse of the individual	6
27	Grandmother of the spouse of the individual	6
28	Grandson of the spouse of the individual	6
29	Granddaughter of the spouse of the individual	6
30	Great-grandson of the spouse of the individual	6
31	Great-granddaughter of the spouse of the individual	6
32	Great-grandfather of the spouse of the individual	6
33	Great-grandmother of the spouse of the individual	6

Any gifts received from any person, other than those specified in points 1 to 7 listed above, will be added to the individual’s income and will be taxable. If the aggregate value of the gift is 50,000 INR then the tax will be exempted. However, if it is beyond 50,000 INR, tax will be charged on full amount.