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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Tools for Estate Planning

Caselet: Mr. Sharma, a resident, gifts Rs 8 lakh in cash to his married daughter and Rs 5 lakh to his brother in a year. His brother is a relative. Under the income tax gift provisions as taught for estate planning, which statement is correct for the recipients?

Neither gift is taxable in the recipients' hands, because gifts from specified relatives such as a father or brother are fully exempt irrespective of the amount. The Rs 50,000 limit applies only to gifts from non-relatives.

  1. ABoth gifts are taxable in the recipients' hands, as cash gifts exceed Rs 50,000 in total
  2. BOnly the gift to the daughter is taxable as she is married
  3. COnly the gift to the brother is taxable as he is a sibling
  4. DNeither gift is taxable, as both are received from relativesCorrect

Explanation

Gifts received from specified relatives, including a parent and a brother, are exempt from tax in the recipient's hands irrespective of the amount. The daughter's marital status is irrelevant. The Rs 50,000 threshold applies to gifts from non-relatives. Clubbing may apply later on income from gifts to a spouse or minor child, but not here.

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