Opinion Of Eminent Legal Luminaries On Controversial Issues

Whether Gift From Brother’s Son Is Liable To Tax U/s. 56?

QUERY: ‘X’ has taken one lakh rupees as a Cash Gift from his own brother’s son, whether taxable or not?
ANSWER: Section 56(2)(vii) of the Income-tax Act, 1961 reads as under:

“Where an individual or a Hindu Undivided Family receives, in any previous year, from any person or persons on or after October 1, 2009 :-

a) Any sum of money, without consideration, the aggregate value which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;

Provided further that this clause shall not apply to any sum of money or any property received –

a) from any relative; or

Explanation – for the purpose of this clause –

a) “Relative means –

i) In the case of an individual “

(A) Spouse of the individual

(B) Brother or sister of the individual;

(C) Brother or sister of the spouse of the individual

(D) Brother or sister of either of the parents of the individuals

(E) Any lineal ascendant or descendant of the individual

(F) Any lineal ascendant or descendant of the spouse of the individual

(G) Spouse of the person referred to in items (B) & (F).

Thus from the above, it is clear that a gift received from brother’s son (nephew) over
Rs. 50,000/- is liable to tax in the hands of the ‘X’. As the gift is more than Rs. 50,000/-, the whole amount is liable to tax in the hands of ‘X’.
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