Ask the expert: Gifts from certain relatives are exempt from IT

Two years ago, I gave my mother-in-law Rs2 lakh. She invested this amount in fixed deposits and is now earning an interest on them. As her annual income is less than Rs1.9 lakh, she does not file her income tax (IT) returns. Will I have to include this income in my IT return? Now, she intends to gift Rs2.5 lakh to me. Will I be required to pay any tax on the additional Rs50,000?

If you have given Rs2 lakh as a gift to your mother-in-law, you don’t have to pay any tax on the interest that is earned on it. Moreover, there is no gift tax applicable on the transaction, either in your hands or your mother-in-law’s hands, since gifts received from specified relatives, including sons-in-law, daughters-in-law and spouse’s parents, are exempt from IT. The income from fixed deposits will be treated as your mother-in-law’s income. The amount of Rs2.5 lakh that your mother-in-law intends to give you will also be considered a gift. However, the full amount of gift is not taxable as she falls in the category of relatives whose gifts are exempt. However, it is advisable to prepare a gift deed now to substantiate your claim in future.

The writer is CEO, Apnapaisa.com, an online marketplace for loans, insurance and investments. He can be reached at
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