gift exemption totally

What I get from your question is, that grandfather of the husband gave a gift to his granddaughter in law. If this is correct, then the gift is completely exempt and no taxability arises. As per income tax law, No tax is applicable if the gift is received from a relative and that relative is included in the definition of relative.

Since any lineal ascendant or descendant of the spouse of the individual is covered in the definition of relative. Therefore it is exempted.

What have you given her as a gift? It is cash or what?