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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Other Products

Under the Income-tax Act as applied in NISM X-B, a resident individual receives a cash gift of Rs 40,000 from a friend (not a relative) during a financial year, and no other gifts. How is this treated?

The Rs 40,000 gift is exempt, because money received without consideration from a non-relative is taxable as income from other sources only when the aggregate for the year exceeds Rs 50,000. Below that limit nothing is taxed.

  1. AFully taxable as income from other sources
  2. BExempt because the aggregate is within Rs 50,000 in the yearCorrect
  3. CTaxable only to the extent above Rs 10,000
  4. DExempt only if the friend is a resident

Explanation

Sums received without consideration from non-relatives are taxable only if the aggregate value exceeds Rs 50,000 in the year. Rs 40,000 is below that limit, so nothing is taxable. The Rs 10,000 threshold is an outdated or incorrect limit.

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