No tax on gift from relatives

SC Casudeva

In a query published in these columns on 22-9-2019 you had replied that there is no limit on gift from brother, son, wife, daughter and son’s wife. But there is a limit of Rs 50,000 for the gift from friends. In this regard, you had further mentioned that as per the I-T Act 1961 under Section 56(2)(x), the gift received amounting more than Rs 50,000 from one or more persons in any financial year will be chargeable to tax in the hands of recipient. Please advise whether this amount of Rs 50,000 or more is inclusive of the amount taken as gift from daughter, son, wife and son’s wife or is it only from the friends and the amount taken as gift from the above mentioned relatives is not to be included in this amount? — Mohinder Sharma

The query which was replied on 22.9.2019 was in respect of gift to daughter, son, wife and son’s wife. The query also contained a reference to gift made to a friend. The amount of Rs 50,000 referred to in the reply is in respect of gift made to a friend. This figure of Rs 50,000 has no relevance to the gift made to daughter, son, wife and son’s wife. As explained in reply to the said query, any amount can be gifted to daughter, son, wife and son’s wife. Such a gift will not be taxable in the hands of the donee. In case a gift is received from friend in excess of Rs 50,000, the entire amount so received shall be taxable in the hands of the recipient.

I am 70+ and a retired government servant from an autonomous body following Central government rules. I am heart/BP patient and spending around Rs 18,000 per annum on OPD consultations/medicines on my treatment. I have health insurance policy too but it does not cover OPD. Can I claim this medical expenditure as deduction in my income tax under Section 80D (limit up to Rs 50,000 per annum) of the Income Tax Act. — S Bhatia

A senior citizen is allowed a deduction from his total income to the extent of Rs 50,000 under Section 80D of the Act in respect of premium paid on any health insurance policy. This amount of Rs 50,000 is inclusive of amount not exceeding Rs 5,000 for preventive health check-up. You can thus claim an aggregate sum of Rs 50,000 which would include the premium paid towards health insurance policy plus any other medical expenditure incurred by you for yourself and the family provided the amount has been paid by a mode other than cash. This restriction of payment by a mode other than cash does not apply to expenditure incurred for preventive health check-up.

I am a super senior citizen aged 81 years and government pensioner. My paternal granddaughter aged 11 years has opened an independent account SBCHQ-SBP-PEHLI UDAAN (M)-INR in SBI. I have been gifting her money through cheques from my savings. She has invested the given amount in FDRs in the bank.  Please advise on the following points:

a)    How the amount of money earned by way of interest from FDRs will be dealt with for income-tax purpose?

b)    Whether the said amount of interest would be considered as an independent income of my granddaughter. She has no income apart from interest income. Can she submit form 15G?

c)    Whether the said amount of interest will be considered as earning of her parents income for tax liability. — RS Gill

Your queries are replied hereunder:

(a)   The amount of interest earned from FDRs which were made from the money gifted by you to your granddaughter would be includible in the total income of either of the parents whose income is higher. The question of filing Form 15G by her would therefore not arise till such time she attains the age of 18 years.

(b)   It would be considered as an independent income after your granddaughter attains the age of 18 years.