Question re. gift tax - can a nana give a gift to his grandc

Hi,

If you refer the provisions of Sec 56(2)(vi), the term 'relative' doesn't include maternal grandfather. Hence, if 'nana' gives gift to grandchild, its taxable in hands of 'Grandchild'. However, the monetary value of gift must exceed Rs. 50,000/- so as to get taxable. If it is lesser than this, then gift is not taxable in hands of receiver, received from whoever.

As a matter of tax planning, 'nana' can give gift to his daughter (i.e. mother of that child). This is exempt since it is covered under 'Relative'. Then mother can give gift to child.

Other views are welcome.

This is how "relative" is defined under 56 (2) (vi):

For the purposes of this clause, "relative" means—

 (i)  spouse of the individual;

(ii)  brother or sister of the individual;

(iii) brother or sister of the spouse of the individual;

(iv) brother or sister of either of the parents of the individual;

(v)  any lineal ascendant or descendant of the individual;

(vi) any lineal ascendant or descendant of the spouse of the individual;

(vii)  spouse of the person referred to in clauses (ii) to (vi).

                       A maternal grandfather is a direct lineal ascendant - grandchild to mother to grandfather.  Why would he be excluded ?

T

Originally posted by : Yogesh Shah
	Hi, If you refer the provisions of Sec 56(2)(vi), the term 'relative' doesn't include maternal grandfather. Hence, if 'nana' gives gift to grandchild, its taxable in hands of 'Grandchild'. However, the monetary value of gift must exceed Rs. 50,000/- so as to get taxable. If it is lesser than this, then gift is not taxable in hands of receiver, received from whoever.   As a matter of tax planning, 'nana' can give gift to his daughter (i.e. mother of that child). This is exempt since it is covered under 'Relative'. Then mother can give gift to child.   Other views are welcome.

Thanks Yogesh - I respectfully disagree - see above.  What do you think of a gift from son-in-law to mother-in-law then?  She is ascendent of spouse....

The gift will be non-taxable.

Originally posted by : Mihir
	The gift will be non-taxable.

Thanks a lot Mihir.  Do you know if there is any case law supporting this?  Apparently, a prominent TV tax program stated that "lineal"means only male ascendants, and this has caused a lot of confusion.

List of Male Donors                                           List of Female Donors 
Father (Papa or Pitaji)                                         Mother (Maa or Mummy)
Brother (Bhai)                                                     Sister (Bahin)
Son (Beta or Putra)                                             Daughter (Beti or Putri)
Grand Son (Pota or Potra)                                  Grand Daughter (Poti or Potri)
Husband (Pati)                                                    Wife (Patni)
Sister’s Husband (Jija)                                        Brother’s Wife (Bhabhi)
Wife’s Brother (Sala)                                          Wife’s Sister (Sali)
Husband’s Brother (Dewar)                                Husband’s Sister (Nanad)
Mother’s Brother (Mama)                                   Mother’s Sister (Mausi)
Mother’s Sister Husband (Mausa)                       Wife’s brother’s wife    (Sala Heli)
Father’s Brother (Chaha or Tau)                         Father’s Brother’s Wife (Chachi or Tai)
Father’s Sister’s Husband(Fufa)                          Father’s Sister (Bua)
Grand Father (Dada)                                          Grand Mother (Dadi)
Great Grand Father (Pardada)                            Great Grand Mother (Pardadi)
Daughter’s Husband (Jawai)                               Son’s Wife (Bahu or Putra Vadhu)
Wife’s Father (Sasur)                                          Wife’s Mother (Sas)
Husband’s Father (Sasur)                                   Husband’s Mother (Sas)
Wife’s Grand Father (Dada Sasur)                      Husband’s Grand Mother (DadiSas)
Husband’s Grand Father (Dada Sasur)                Wife’s Grand Mother (Dadi Sas)
Wife’s Great Grand Father                                  Husband’s Great Grand Mother
(Bada Dada Sasur)                                             (Badi Dadi Sas)
Husband’s Great Grand Father                           Wife’s Great Grand Mother
(Bada Dada Sasur)                                             (Badi Dadi Sas)
Brother’s Wife                                                    Mother’s Brother’s Wife (Mami)
(Bhabhi)                                                              Husband’s Brother’s Wife
                                                                           (Devrani or Jithani)

Hi Folks,

Please read the above definition again. All relatives are given from point of view of RECEIVER. Now, Mr. Sam you tell me how can the 'nana' shall be lineal ascendant or descendant of GRANDCHILDREN. His / Her lineal relationship would include mother / father OR father's mother / father and so on. Don't stretch towards maternal relatives.

Other views are welcome.

Originally posted by : Yogesh Shah
	Hi Folks,   Please read the above definition again. All relatives are given from point of view of RECEIVER. Now, Mr. Sam you tell me how can the 'nana' shall be lineal ascendant or descendant of GRANDCHILDREN. His / Her lineal relationship would include mother / father OR father's mother / father and so on. Don't stretch towards maternal relatives.   Other views are welcome. ascendant or descendant Read more at: /forum/question-re-gift-tax-can-a-nana-give-a-gift-to-his-grandc-258890.asp

Lineal Ascendant:  grandchild to mother (lineal) to her father (nana) :  lineal.  Lineal means in a straight line (Webster's dictionary - in a straight line, male or female). 

Where does the law say that females are excluded in lineal ascendancy ? 

If you are trying to say that lineal ascendant is only one generation, then father's father (dada) is also not allowed to give a gift - but this is not correct either.

Yogeshji, please read a very detailed discussions here: 

https://www.itatonline.org/articles_new/index.php/law-on-taxability-of-gifts-a-comprehensive-analysis/#link

This confusion has been caused by a famoust TV personality and should be corrected.  There is considerable case law that supports the fact that lineal ascendant/descendant can include females (mother's side).

Hello Mr. Sam,

This is my last post w.r.t. this discussion. What you are talking about is collateral ascendant or descendant. Whereas Income Tax Act says LINEAL ascendant or descendant. You mentioned that no law has yet said that females are excluded. Similarly no case law is there which says that maternal relations are included in LINEAL ascendancy or descendancy.

Anyway, it is a matter of interpretation. You interpreted provision in your way and I have interpreted in my way. Lets not make it a debate instead of discussion.

Signing Off.