Grandparents gifts Rs.5 lakhs to a grandchild - What will be the tax treatment?

Since the grandson is a lineal descendant of the grandparents , the gift received from them is considered to be from a "relative" as per the Income Tax Act. Therefore, the gift of Rs. 5 lakhs is exempt from Income tax under Section 56(2)(x).

No requirement to show this gift in the income tax return as taxable income 

@ Apurba Pandit

As per Section 56(2) of the I-T Act, no gift tax is payable for a Grandparent giving gift [No Cash Gift over 50K] to the grandchild.

Since no tax is payable, there is no requirement of mentioning it in ITR. 

However, it is always safe to keep a certificate of GIFT from the Donor to the Receipient for any future queries [if any] from the I-T Dept. The Certificate should clearly mention the Relationship