Receiving gifts tax-free, stress-free

Practical tips on taxability, documentation & reporting of gifts

- JIGAR MUKESH PATEL

Query-1: I am a member of the Hindu Undivided Family (HUF) of my father. During the current year, I have received Rs 15 lakh from the HUF. Is this amount taxable in my hands?

Reply: Under the provisions of Section 56(2)(x) of the Income-tax Act, a gift received by an HUF from its member is not liable to tax irrespective of the amount involved, since the member is regarded as a 'relative' of the HUF.

However, an interesting question arises in the reverse situation, where a member receives money from the HUF. While divergent ITAT decisions have been rendered on this issue, a logical interpretation supported by judicial rulings is that an HUF essentially represents a group of relatives. Consequently, a payment from the HUF to one of its members can be regarded as a gift from relatives, qualifying for such exemption.