Spouse and relatives for whom gifts are not taxable
If there is an amount that is received from the spouse then this would not be considered as a gift as this is clearly covered under the definition of a relative.
One of the important details with respect to the taxation of gifts in the Income Tax Act is the definition of relatives. There are a great many relatives whom people consider to be close and hence they often get money or other assets from them however the question under the tax laws is not whether one considers them as a close relative but whether they fall under the definition given here. This happens with respect to the relatives of the spouse. Here is a detailed look at some of the conditions that will govern the classification the relatives of a spouse and what this means under the gifting provision.
Spouse
If there is an amount that is received from the spouse then this would not be considered as a gift as this is clearly covered under the definition of a relative. There are two aspects that one must consider on the income tax front when one is receiving something from the spouse which is the impact in terms of the gift and the impact on account of clubbing of income. As far as the gift is concerned along with any amount related to its taxation there is nothing to worry about as the amount received from a spouse would not be taxed without any limits. This is a positive thing for any person because there are lots of occasions wherein an amount has to be given to the spouse to meet some expense and there would not be any tax implication of this move. The other aspect is trickier because the clubbing provision says that any income arising to the spouse due to amount transferred to them would be taxable in the hands of the giver of the amount. This means that even though the initial amount of the gift from the spouse would not have any tax there might be a tax liability arising at a later stage.
Brother or sister of the spouse
The definition of a relative expands with the inclusion of the brother or the sister of the spouse. This means that those related to the spouse are included within the definition. There are a lot of questions whether an amount received from brothers or sisters of the spouse would be covered as a relative and would not be taxable. The answer is yes and this is a big relief because there are a lot of occasions when the brothers or sisters of the spouse actually make a gift and this is seen on several special occasions. Such events and gifts are thus not a source of worry on the taxation front.
Lineal ascendant or descendant of the spouse
Ascendants or descendants of the individual are covered under the definition of relatives and this is natural but what is also a source of comfort for the individual is that the lineal ascendants and descendants of the spouse are also covered. There are family occasions wherein amounts or gifts are received from the ascendants in the spouse’s family and this again would not put any financial burden on the individual. This means taking of gifts from the ascendants or descendants of the spouse is a non taxing affair and this can be clearly accounted for. These days especially in some families even youngsters give gifts that are significant in terms of value and if this is done by a descendant on the spouses side then again it would not be a concern in terms of taxation as this is also covered under the definition of a relative. All this can provide a big relief at the end of the day.
Happy Investing
One of the important details with respect to the taxation of gifts in the Income Tax Act is the definition of relatives. There are a great many relatives whom people consider to be close and hence they often get money or other assets from them however the question under the tax laws is not whether one considers them as a close relative but whether they fall under the definition given here. This happens with respect to the relatives of the spouse. Here is a detailed look at some of the conditions that will govern the classification the relatives of a spouse and what this means under the gifting provision.
Spouse
If there is an amount that is received from the spouse then this would not be considered as a gift as this is clearly covered under the definition of a relative. There are two aspects that one must consider on the income tax front when one is receiving something from the spouse which is the impact in terms of the gift and the impact on account of clubbing of income. As far as the gift is concerned along with any amount related to its taxation there is nothing to worry about as the amount received from a spouse would not be taxed without any limits. This is a positive thing for any person because there are lots of occasions wherein an amount has to be given to the spouse to meet some expense and there would not be any tax implication of this move. The other aspect is trickier because the clubbing provision says that any income arising to the spouse due to amount transferred to them would be taxable in the hands of the giver of the amount. This means that even though the initial amount of the gift from the spouse would not have any tax there might be a tax liability arising at a later stage.
Brother or sister of the spouse
The definition of a relative expands with the inclusion of the brother or the sister of the spouse. This means that those related to the spouse are included within the definition. There are a lot of questions whether an amount received from brothers or sisters of the spouse would be covered as a relative and would not be taxable. The answer is yes and this is a big relief because there are a lot of occasions when the brothers or sisters of the spouse actually make a gift and this is seen on several special occasions. Such events and gifts are thus not a source of worry on the taxation front.
Lineal ascendant or descendant of the spouse
Ascendants or descendants of the individual are covered under the definition of relatives and this is natural but what is also a source of comfort for the individual is that the lineal ascendants and descendants of the spouse are also covered. There are family occasions wherein amounts or gifts are received from the ascendants in the spouse’s family and this again would not put any financial burden on the individual. This means taking of gifts from the ascendants or descendants of the spouse is a non taxing affair and this can be clearly accounted for. These days especially in some families even youngsters give gifts that are significant in terms of value and if this is done by a descendant on the spouses side then again it would not be a concern in terms of taxation as this is also covered under the definition of a relative. All this can provide a big relief at the end of the day.
Happy Investing
Source:Moneycontrol.com
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