Gift from daughter in law to father in law

What type of Gift ???

it is cash gift . it is exempt bcoz Donor Donee fall in the definition of relative under section 56

relative" means,—

[i] in case of an individual—

[A] spouse of the individual;

[B] brother or sister of the individual;

[C] brother or sister of the spouse of the individual;

[D] brother or sister of either of the parents of the individual;

[E] any lineal ascendant or descendant of the individual;

[F] any lineal ascendant or descendant of the spouse of the individual;

[G] spouse of the person referred to in items [B] to [F]; and

Whether Cash Gift from Daughter in Law to her Father in Law is exempt under Income Tax?

- Yes...

whether gift deed/affidavit required in this case on stamp paper?

- Yes... Better to prepare gift deed.

Exempt, and the clubbing angle is worth adding:

• A daughter-in-law is a relative of her father-in-law (he is a lineal ascendant of her spouse). The gift is exempt under Sec 56(2)(x).

• Clubbing: Sec 64(1)(vi) clubs income from assets gifted by a father-in-law to a son's wife, not the reverse. Income the father-in-law earns from this money (FD interest etc.) is taxed in his own hands. No clubbing back to the daughter-in-law.

• Gift deed: not legally mandatory for cash or bank-transfer gifts of movable property. A simple gift letter on plain paper, or a notarised gift deed, plus the bank trail is good evidence. Stamp duty applies only if a formal deed is executed (State law).

• Make the gift by bank transfer. Cash receipt of Rs 2 lakh or more attracts penalty under Sec 269ST (equal to the amount).

• If the daughter-in-law's own funds come from her husband's gift, the clubbing chain can trace back to the husband. Keep the source clear.