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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Tax Provisions for Special Cases

Caselet: Kiran, a resident individual aged 35, has a salary income, and also receives Rs 2,00,000 as a gift in cash from his friend (not a relative) during the year. Kiran asks his investment adviser about the tax treatment of the gift under the provisions for sums received without consideration. What is the correct advice?

The entire Rs 2,00,000 is taxable as income from other sources. Gifts from non-relatives exceeding Rs 50,000 in aggregate in a year are taxed in full, not only the excess, regardless of how the money was received.

  1. AThe whole Rs 2,00,000 is exempt because it is below Rs 50,000 per donor
  2. BRs 2,00,000 is taxable as income from other sources since the aggregate exceeds Rs 50,000 in the yearCorrect
  3. COnly the amount above Rs 2,00,000 is taxable
  4. DThe gift is taxable only if received through a bank transfer

Explanation

Money received without consideration from a non-relative is taxable as income from other sources if the aggregate exceeds Rs 50,000 in the year. When the limit is exceeded, the entire amount, not just the excess, is taxable. Here Rs 2,00,000 exceeds Rs 50,000, so the whole sum is taxed. The mode of receipt does not change the rule.

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