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Taxation of gifts

28 May 2016

What would be the tax implication on income generated from gifts received by a parent from the child, for e.g., interest income on gift received in form of cash. Will it be clubbed in the income of child or will it be normally taxed in the hands of parent?

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Abhishek Ranjan Singh (Managing Director and Founder of ARS Solutions) (6570 Points)
Replied 28 May 2016

The I-T Department considers:

money given in cash/cheque or drafts
immovable property such as land or building or both
movable property like shares, jewellery, drawings, paintings or sculptures, gold bars as gifts.

When are gifts exempt from tax?

You are exempt from tax under the following situations:

monetary value of all gifts received don't add up to Rs.50,000.
Received from a relative (see below)
Received on occasion of marriage
Received by way of a will or inheritance
Received in contemplation of death of the payer
Received from Local Authority
Received from a fund, foundation, university, or other educational institution, hospitals, or any trust of institution defined in Section 10(23C)
Money Received from a charitable Institution registered under section 12AA

Who is a relative?

Your immediate family - parents, siblings, spouse and children
Your spouse's parents and siblings
Your parents' siblings
Your siblings and their spouses

Abhishek Ranjan Singh
ARS Solutions
www.arssolutions.co.in
+919022838615

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1 Like

Pranay Mehrotra (Student) (25 Points)
Replied 28 May 2016

Thank you Sir. But that only solves one part of my query. The other part is that whether the interest income earned from such gift will be taxable in the hands of donor (under clubbing) or will it be normally taxed in the hands of donee?