Gift No Objection

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This discussion explores the tax implications of a 50 lakh gift from Ankit to his sister, Bindu. It addresses whether income from the gift will be clubbed with Ankit's income and how to potentially avoid this. The advice suggests that gifting to a sister generally doesn't trigger clubbing provisions under the IT Act, especially when transferred via banking channels, and clarifies the role of No Objection Certificates (NOCs).

Ritika Ahuja

Ritika Ahuja (Querist)

18 May 2024 Mr Ankit is giving a gift of 50 lakhs to his sister Bindu. As part of the Gift, Ankit prepares a No Objection Certificate which states that Ankita (Bindu's elder daughter) and Arpita (Bindu's Younger daughter) are providing no objection to Ankit for giving a gift to their mother as their grandfather's wish was to provide this money for the marriage of the grandaughters, however, since the marriage of the grand daughters have not taken place, Ankit is gifting this money to his sister as per his father's last wish. Similarly NOC is taken from the sister - Bindu as well, and in addition, one clause mentions that both of Bindu's daughter's are willing to indemnify their maternal uncle - Mr Ankit.

Facts to note are - both the neices of Ankit (i.e. Bindu's daughter's are unmarried).

Question 1: Does provision of clubbing of income apply? If yes, in whose hands will the income from the 50 lakhs be clubbed with?

Question 2: Is there a way in which the clubbing provision does not apply?

Question 3: will the donee i.e. Bindu who is the sister of Ankit, have to pay any taxes - be it gift or income tax?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

18 May 2024 As per IT act, when you are giving gift to your sister, clubbing provision does not apply. Give it by banking mode.
The NOC is your mutual understanding, not required by ITD.

Message likes : 1 times

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

07 September 2024 Good Luck.

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