Taxability of gift
This query is : Resolved
16 April 2017
I hv recd cash gift of ₹ 25lacs from my mother in law but at the time of receiving the money I didn't get marry with her daughter, after 15 days my marriage got registered. Is it exempted??
Suppose, If I receive the same at time of marriage or after marriage from my mother in law, then what would be the tax implications??
17 April 2017
If you have received gift from mother in law before marriage with her daughter, your mother in law will be non relative for you and as such you can not accept gift more than Rs 50000. But situation will be different if cash gift is received on the occassion of after marriage. After marriage she will be relative and gift received from relative is exempt. On the ocassion of marriage also it will be exempt by the provisions of section 56(2).
17 April 2017
when we should check the relationship amOng donor & donee??
whether clubbing of income will arise in above situation??
17 April 2017
clubbing of income does not arise in gift from mother in law to son in law.
17 April 2017
thank you sir, one more thing that - Selling of sim cards by airtel distributor is chargeable to vat or service tax. Distributors buy recharge cupons from the company @ 4.25% margin and when they are selling recharge balance & cupons to Retailers they pass on 3% margin to Retailers they keep only 1.25% margin with himself. While computing his total income under income tax, the turnover would be only commission fixed by telecom co. i.e. 4.25% or whole amount received from Retailers i.e. recharge cupon amount. Is they are also liable for service tax, if yes then under which service??
26 July 2025
Here’s a detailed answer for your **gift taxability** query and then a brief on your sim card/distributor question:
---
### Taxability of Gift from Mother-in-Law Before and After Marriage
1. **Gift Received *Before* Marriage**
* Relationship status: At the time of gift receipt, your mother-in-law is **not** a relative (since marriage is not yet done).
* Tax implication: Gift from a **non-relative** exceeding ₹50,000 is **taxable as income under Section 56(2)(x)**. So, ₹25 lakhs gift will be fully taxable as income in your hands.
2. **Gift Received *On or After* Marriage**
* Relationship status: Once married, mother-in-law becomes a **relative** as defined under Income Tax Act.
* Tax implication: Gifts from **relatives** are **fully exempt** from tax, no matter the amount.
* Also, gifts received **on the occasion of marriage** are exempt regardless of donor (Section 56(2)(x)(ii)).
3. **When to Check Relationship?**
The relationship is determined **at the time of gift receipt**.
4. **Clubbing of Income**
* No clubbing provisions apply here.
* Gift received from mother-in-law to son-in-law is not subject to clubbing under Section 64.
---
### Summary Table
| Scenario | Relationship at Receipt | Taxability |
| ---------------------------- | ----------------------- | -------------------- |
| Gift before marriage | Non-relative | Taxable if > ₹50,000 |
| Gift on or after marriage | Relative | Fully exempt |
| Gift on occasion of marriage | Irrespective | Fully exempt |
---
### Sim Card Distributor: VAT vs Service Tax and Turnover for Income Tax
* **VAT or Service Tax?**
Selling **physical recharge coupons** or SIM cards is generally treated as sale of goods — **VAT applies** on sale of goods.
Service Tax was not applicable on sale of goods; it applies to services.
* **Income Computation for Distributor**
The distributor’s **income** would be the **commission or margin earned** (here, the 4.25% margin from telecom company), not the entire sale amount from retailer.
Only the margin is considered as income for tax purposes.
* **Service Tax Liability**
If distributor only sells recharge coupons or SIM cards (goods), no service tax applies.
Service tax applies on **services** like commission agency services, telecom services, etc.
---
If you want, I can help with more detailed tax provisions or examples for any of the above!
---
### Taxability of Gift from Mother-in-Law Before and After Marriage
1. **Gift Received *Before* Marriage**
* Relationship status: At the time of gift receipt, your mother-in-law is **not** a relative (since marriage is not yet done).
* Tax implication: Gift from a **non-relative** exceeding ₹50,000 is **taxable as income under Section 56(2)(x)**. So, ₹25 lakhs gift will be fully taxable as income in your hands.
2. **Gift Received *On or After* Marriage**
* Relationship status: Once married, mother-in-law becomes a **relative** as defined under Income Tax Act.
* Tax implication: Gifts from **relatives** are **fully exempt** from tax, no matter the amount.
* Also, gifts received **on the occasion of marriage** are exempt regardless of donor (Section 56(2)(x)(ii)).
3. **When to Check Relationship?**
The relationship is determined **at the time of gift receipt**.
4. **Clubbing of Income**
* No clubbing provisions apply here.
* Gift received from mother-in-law to son-in-law is not subject to clubbing under Section 64.
---
### Summary Table
| Scenario | Relationship at Receipt | Taxability |
| ---------------------------- | ----------------------- | -------------------- |
| Gift before marriage | Non-relative | Taxable if > ₹50,000 |
| Gift on or after marriage | Relative | Fully exempt |
| Gift on occasion of marriage | Irrespective | Fully exempt |
---
### Sim Card Distributor: VAT vs Service Tax and Turnover for Income Tax
* **VAT or Service Tax?**
Selling **physical recharge coupons** or SIM cards is generally treated as sale of goods — **VAT applies** on sale of goods.
Service Tax was not applicable on sale of goods; it applies to services.
* **Income Computation for Distributor**
The distributor’s **income** would be the **commission or margin earned** (here, the 4.25% margin from telecom company), not the entire sale amount from retailer.
Only the margin is considered as income for tax purposes.
* **Service Tax Liability**
If distributor only sells recharge coupons or SIM cards (goods), no service tax applies.
Service tax applies on **services** like commission agency services, telecom services, etc.
---
If you want, I can help with more detailed tax provisions or examples for any of the above!
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