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cash gift exemption

zakir (proprietor) (79 Points)

20 September 2010

Mr. x wants to gift Rs.50,000/each in cash to his 3son, 2daughter, 1cousin son & 2cousin daughter.

total gift of Rs.4,00,000/- ie 50000 each to eight relatives.

Please Highlight the Income Tax Exemption Rule on above.

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9 Replies

Manoj BG (Tax Professional and in Service) (1795 Points)
Replied 20 September 2010

as per section 56(2)(vi), cash gift received is taxable in hands of receipient. However section also specifies some exceptions to this rule. this exception provides that if the cash gift received from relative, it would not get taxed in hands of recipient. Section aslo specifies what is meant by relatives and all the persons mentioned by u are also within the meaning of term relative.

Thus, neither of the cash gift received by relatives would get taxed in hands of your relatives who received such cash gift.

Regards,

Manoj

Rahul Ramesh (CA Final, BCom, MBA) (1084 Points)
Replied 20 September 2010

Agree with Manoj

Prachi Jindal (CA-Article-Final-Student) (129 Points)
Replied 12 October 2010

plz tell...

if it is not taxable in the hands of recepient...then in what way it will be taxable in the hands of Mr X...??

and if gift given in kind does not exceed 50000 in value it is not taxable in the hands of recepient and on the other hand it is not taxable in the hands of transferor as gift in kind is not a transfer...now wht to do in this case..?? kya ye kisi ke hands mei taxable nahi hai...???

vkbothra (Learning ) (690 Points)
Replied 12 October 2010

Dear Prachi

Dont get confuse, its simple

the one who is giving gift, for him/her gift is not taxable, as he/she is the doner of the amount.

the one who recives the gift, for them it is tax free if the amount is less than 50000/-.

and if the amount is less than 50000/- this will be considered as gift but will be tax free in both hands.

doner will never get effected with any amount, which he/she is giving to his/her reletives or others.

;)

Prachi Jindal (CA-Article-Final-Student) (129 Points)
Replied 18 October 2010

ok...50000 is not chargeable in both the hands...now i get it....thanks a lot....:) thank u so much...:)

vkbothra (Learning ) (690 Points)
Replied 18 October 2010

My pleasure

;)

Vishal (Manager) (21 Points)
Replied 11 December 2010

I also want to know on this, hence replying to the same post.

I mainly want to know, can the donor claim tax exemption for the donated amount of said cash gift?

in the example above, can Mr.X claim tax exemption while filing income tax return?

thanks a lot for the help.

-vishal

Harsha (Student CA Final ) (71 Points)
Replied 05 January 2016

Hello

Please let me know the taxability in the hands of donor of cash gift exceeding Rs 50000 to a relative. The donee will not be taxed for the gift as received from from relative but will donor get the dedcution of cash gift from his income...????

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 06 January 2016

Hello,
The Income Tax Act does not provide for any deduction on account of gifts made by an assessee(Donor). Therefore, the gift to your relative does not change your taxable income.