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Tax treatment of income earned from money gifted to sibling

Tax planning 436 views 1 replies

Ashwin

AFP

93 Points Joined January 2011

If a person gifts 10 lakhs to his brother and the brother invests the amount and earns income of 2.5 lakhs from the gifted amount, what would be the tax treatement of 2.5 lakhs.

Will 2.5 lakhs be clubbed with the income of the person who gifted?

is the 2.5 lakhs considered the receivers income, and the brother pays tax on 2.5 lakhs as per his slab.?

Thanks in advance.

Replies (1)

Gift from relatives is not taxable. but interest earned from amount invested (Rs. 2.5L) will be taxable in hands of brother. Clubbing provisions are not attracted in this case as there has been no transfer of income while retaining the asset(source of income).