Money transction within Family

1. Advisable, even though it be exempt.

2. Query may be raised. No penalty if explained properly.

Money received from relatives is fully exempt under Section 56(2)(x) , no gift tax liability regardless of amount. Relatives include spouse, siblings of self and spouse, lineal ascendants and descendants, and siblings of parents.

If the sender is NOT a relative: gifts above Rs 50,000 in a financial year are taxable as income from other sources in the hands of the receiver.

On income generated from gifted money: Section 64 applies. If you gift money to your spouse or minor child and they invest it, the income from that investment is clubbed back into your hands (the transferor) and taxed in your ITR. Clubbing continues until the relationship ceases.

For reporting: gifts from relatives need not be declared in ITR separately, but document the relationship and the transfer (bank statement, gift deed if substantial). If clubbing applies, report the clubbed income in Schedule SPI.

For complex family transfer situations or multi-year ITR planning around Section 64, Tax Garden CAs can map out the exact tax impact and compliance steps.