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

Mr. Raghav Menon, aged 45, is a resident individual who is a partner in a firm and also earns salary from a company. For the year, he receives a gift of Rs 70,000 in cash from his friend (not a relative) on his birthday. He receives no other gifts during the year. Under the provisions of income from other sources, how much of this gift is taxable in his hands, assuming the aggregate-value threshold of Rs 50,000 applies?

The entire Rs 70,000 is taxable. When the total of gifts received in a year from non-relatives exceeds Rs 50,000, the whole amount is taxed as income from other sources, and the Rs 50,000 limit is not deducted as an exemption from the amount.

  1. ANil, because the gift is below Rs 1,00,000
  2. BRs 20,000, being the excess over Rs 50,000
  3. CRs 70,000, being the entire amountCorrect
  4. DRs 50,000, being the threshold amount

Explanation

Where the aggregate sum received without consideration from non-relatives exceeds Rs 50,000 in a year, the entire sum is taxable as income from other sources, not merely the excess. Here Rs 70,000 exceeds Rs 50,000, so the full Rs 70,000 is taxable. The Rs 20,000 option wrongly treats the threshold as a basic exemption deduction.

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