Is Gift From NRI Father-in-Law Tax Free!

Can my NRI father in law gift me money & is that money taxable?

Mandeep Kumar

Section 56(2)(v) deals with the taxability of gift receipt. It provides that gift exceeding Rs 50,000 in a year is taxable in the hands of receiver. However , there are some exceptions when any amount of gifts can be received without any liability of tax either in hand of payer or payee.The provision under section 56(2)(vi is given as under:

(vi) where any sum of money, the aggregate value of which exceeds fifty thousand rupees, is received without consideration, by an individual or a Hindu undivided family, in any previous year from any person or persons on or after the 1st day of April, 2006, the whole of the aggregate value of such sum:

Provided that this clause shall not apply to any sum of money received

(a) from any relative; or

(b) on the occasion of the marriage of the individual; or

(c) under a will or by way of inheritance; or

(d) in contemplation of death of the payer; or

(e) from any local authority as defined in the Explanation to clause (20) of section 10; or

(f) from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or

(g) from any trust or institution registered under section 12AA.

The term ” Relative” is defined under this provision only in following words :

Explanation.For the purposes of this clause, relative means

(i) spouse of the individual;

(ii) brother or sister of the individual;

(iii) brother or sister of the spouse of the individual;

(iv) brother or sister of either of the parents of the individual;

(v) any lineal ascendant or descendant of the individual;

(vi) any lineal ascendant or descendant of the spouse of the individual;

(vii) spouse of the person referred to in clauses (ii) to (vi).

You can easily see that Father-in-Law does come under the definition. Therefore whatever be the gift amount from your NRI father-in-law , the whole amount of gift shall be free.