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CMA Intermediate · Direct and Indirect Taxation · Income from Other Sources

Which of the following receipts by an individual is NOT covered by the exclusions in section 92(3), so that it would be taxable under section 92(2)(m)(i) if it exceeds Rs. 50,000?

The Rs. 2,00,000 birthday gift from a friend is taxable. Gifts from relatives, on the individual's marriage, or under a will are excluded by section 92(3), but a birthday gift from a non-relative has no exclusion and exceeds Rs. 50,000.

  1. ARs. 2,00,000 received from the individual's sister
  2. BRs. 2,00,000 received under a will
  3. CRs. 2,00,000 received from a friend on the occasion of the individual's marriage
  4. DRs. 2,00,000 received from a friend on the individual's birthdayCorrect

Explanation

Section 92(3) excludes sums from relatives, on the occasion of marriage of the individual, and under a will or by inheritance. A sister is a relative, and the marriage and will receipts are also excluded. A birthday gift from a friend falls under none of the exclusions, so being above Rs. 50,000 the whole amount is taxable.

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