Gift from grandfather to minor grandson

arpit (Manager) (247 Points)

12 February 2014

If a grandfather gifts some amount to a grandson who is a minor.... It is exempt from Income Tax... But will the clubbing of incomes provisions apply as per sec 64...

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(Guest)

The income arising from the gift amount. for eg if Rs 100000/- is gifted and invested in FD in minor's name, the interest on FD will be clubbed with the income of the parent whose income is higher.

SAURABH NENE (Chartered Accountant) (226 Points)
Replied 12 February 2014

Gift from Relative is exempt. For grandson his grandfather is a relative being lineal ascendant. Hence gift received is not an income at all for the grandson. Question of clubbing will arise if, it is income chargable to tax in the hands of minor. Then only it will clubbed in the hands of his father. But in this case it is not so.

(Guest)

Originally posted by : SAURABH NENE
	Gift from Relative is exempt. For grandson his grandfather is a relative being lineal ascendant. Hence gift received is not an income at all for the grandson. Question of clubbing will arise if, it is income chargable to tax in the hands of minor. Then only it will clubbed in the hands of his father. But in this case it is not so.

The question of the taxability of the gift is out of question! The question is asked about the taxability of income arising out ofinvestment of the gift amount, which in my view would be clubbed.

Arpit Pachisia (CA) (734 Points)
Replied 12 February 2014

Well, gift from relative is exempt. so it is not taxable under sec 64, but if any income arises on such gifted property will be taxable and clubbed in the income of parents having higher income.

So i think as per your query, there is no income arises on such gift and hence gifted amount to minor grandchild is exempt.

Thank you