Gift tax on money

I want to gift 5 lakhs from my tax paid income to my younger brother in love and affection. Does my brother has to also pay tax on it once received? How much maximum money can I gift to him per year? Also, do we need to register a gift deed to show this transfer?
Asked 9 months ago in Income Tax from Bangalore, Karnataka
You can gift Rs. 5 lacs to your brother which will be covered under section 56(vii)(2)..... It will be exempt income in his hands..... It is suggested that one should prepare gift deed on 100 rs. Stamp paper....
Bhagyashree Kankaria
CA, Pune
26 Answers
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Dear Tax Payer,

As per section 56 of the Income-tax Act, 1961, any gift received from the relative is fully exempt from tax. Whether you are received the gifts as Cash, Cheque or any goods (both movable or immovable). You are not liable to pay the tax for these gifts. 
"relative" means—
   (i)	spouse of the individual;
  (ii)	brother or sister of the individual;
 (iii)	brother or sister of the spouse of the individual;
 (iv)	brother or sister of either of the parents of the individual;
  (v)	any lineal ascendant or descendant of the individual;
 (vi)	any lineal ascendant or descendant of the spouse of the individual;
(vii)	spouse of the person referred to in clauses (ii) to (vi);

Hence, gift of Rs. 5 lakhs to your brother shall not be taxable in his hands.  There is no maximum limit for the gift. It is better to document the gift by way of a gift deed to substantiate the transaction in future.

Regards,
CA. Rajeev P T, BBA, ACA, ACS
Email: ca.rajeevpt@gmail.com

*****This Opinion is based on stated facts and the legal position as on date. The views expressed may not be relevant where there is any change in facts or law. This Opinion is not in the nature of an assurance that an alternative view or interpretation cannot emerge
Rajeev P T
CA, Chennai
34 Answers
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Dear sir,

You can give as much money as you want to your younger son. There is no limit on giving gift to relatives.

Further it is always better to execute a gift deed to strengthen the documentary evidence
Abhishek Dugar
CA, Mumbai
766 Answers
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You gift to brother is exempt.

No need of registering gift deed. There is no limit on the same but every year gifting we will not suggest as this can attract clubbing provisions i.e. the income from the same will be taxed in your hand if the officer feels that it is amount diversion only to avoid tax.
Shyam Sunder Modani
CA, Hyderabad
955 Answers
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  Talk to Shyam Sunder Modani
Any income gift by you to your brother will not be subject to service tax however a legal gift deed required to be executed among you and your brother.

You can pay as much money you want to gift during the year through legal gift deed and from your tax paid income.

Gift deed need to be on stamp paper and same need to be notorised for future reference.
Vishrut Rajesh Shah
CA, Ahmedabad
194 Answers
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  Talk to Vishrut Rajesh Shah
Dear Sir,

Gift to Brother falls under the bracket of relative under Income tax Laws, and gifts to relatives are exempt.

So No Tax shall be paid by either party.

But we would suggest you to prepare a Gift Deed for your record and to prove its genuity, in case the Income Tax Officer asks for one.

Trust that clarifies your query.

Feel Free to get back for any further clarifications.

Thanking You.

Regards,
CA Rohit R Sharma
BCOM, ACA, LLB - GEN, CERT. FAFP
Rohit R Sharma
CA, Mumbai
719 Answers
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