Gift from NRI father not liable to tax

I am a NRI based in Canada and have an NRO account in India. If I give ₹75 lakh to my major daughter in India and if she deposits it in a bank fixed deposit for 10 years, will either of us be liable to pay income tax in India?

- NEERAJ AGARWALA

—Sidharth Mishra

As per Section 56(2) of the Income-Tax Act, any gift given to close relatives (including parent to daughter) is exempt from taxation. Therefore, there will be no tax liability on the gift amount itself. However, the income generated from the fixed deposit (FD) where your daughter deposits the gifted amount will be taxable in her hands. The interest earned from the FD is considered income from other sources and will be taxed according to her income tax slab.