I fall in 30% Tax bracket. Can I gift 10 lakhs by cheque to my Father/Mother in Law who fall below 5 laks income and hence are non tax payer? How will the interest be treated;
If the interest is reinvested, interest on interest will be treated as whose income?
Interest will be taxed in FIL/MIL account. No clubbing provision.
Gift received from a relative is not taxable in hands of the recipient under section 56 of Income Tax Act. The persons who are considered as relatives are
In case of an individual
Spouse of the individual
Brother or sister of the individual
Brother or sister of the spouse of the individual
Brother or sister of either of the parents of the individual
Any lineal ascendant or descendant of the individual
Any lineal ascendant or descendant of the spouse of the individual
Spouse of the person referred to in above points
Son in law is relative as per clause 5 with 7; so the gift from son in law is tax-free.
I understand that there will be no gift tax.
My question is whether interest earned on this amount will be treated as my income or his/her income.
It will be their income. No clubbing provision in this case.
What all about gifts given to nephew and niece? are they further taxable?
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