Tax liability on gift

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 July 2015 I recently received gift of 1.5 lac rs in my account from my elder brother and used the same to make part payment of my already existing home loan.What are the tax implication of this on me or my brother .We both come in 30% tax bracket

Nikhil Kaushik

Nikhil Kaushik (Expert)
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19 July 2015 no tax is applicable on this..............

Querist : Anonymous

Querist : Anonymous (Querist)

20 July 2015 But won't income clubbing play a part here , which usually happens when gifted money is invested

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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26 July 2025 Great question — and it’s good that you’re thinking about **clubbing provisions** and **gift tax rules** together. Let’s break this down clearly, based on your situation:

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## 🔍 **Your Situation**

* You received **₹1.5 lakh as a gift** from your **elder brother** (credited to your bank account).
* You used it to make a **home loan payment**.
* Both you and your brother are in the **30% tax bracket**.
* You're asking:

* Is **this gift taxable**?
* Does **income clubbing** apply?

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## ✅ **Answer: No Tax or Clubbing — You're Safe**

### 🔹 1. **Is the Gift Taxable in Your Hands?**

**NO**, because of the **relative exemption** under **Section 56(2)(x)** of the Income Tax Act.

> Gifts received from a **brother** are **fully exempt**, irrespective of the amount.

✅ So, the ₹1.5 lakh is **not taxable** in your hands.

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### 🔹 2. **Is It Taxable in Your Brother’s Hands?**

**NO.** The gift giver (your brother) is not taxed when giving a gift, even if it’s a large amount.

✅ So, **your brother also has no tax liability**.

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### 🔹 3. **Does Clubbing of Income Apply?**

Also **NO** in your case — and here’s why:

> **Clubbing applies only** when a person gives a gift to **spouse**, **minor child**, or **daughter-in-law**, and **income arises from that gift**.

### Your case:

* You received the gift from a **brother** (not a spouse or minor child).
* You didn’t invest the gift to **earn income**, you used it to **pay off a loan**.

✅ **No income has been generated** from the gift → So, **clubbing doesn’t apply**.

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## ✅ Summary of Tax Implication

| Point | Your Case | Taxable? |
| ------------------------------ | --------------------------------------- | -------- |
| Gift amount | ₹1.5 lakh from elder brother | ❌ No |
| Used for | Home loan repayment | ❌ No |
| Clubbing of income applicable? | No, because not spouse/minor child | ❌ No |
| Any tax for your brother? | No (gifts are not taxable to the giver) | ❌ No |

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If you want, I can provide:

* A simple **gift declaration format** (optional, but good to keep for record)
* Clarification on **larger gifts**, or if gifted funds are used to earn income (e.g. FD, rent, etc.)

Let me know how you'd like to proceed!

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