I am member of HUF and HUF gives gift to me. Is the amount exempt from income tax under section 56(2)(vii) or under 10(2) ?
The Finance Act, 2012 has widened the definition of relative under Section 56(2)(vii) by providing that in case of a Hindu Undivided Family, any member thereof shall be treated as a relative. Therefore, an HUF can now make or receive gifts, to or from any of its members, without attracting any liability for income-tax. It is important to note that this amendment has been made retrospectively with effect from 1st October, 2009. Also remember that one of the important exceptions provided, in regard to taxing gifts as income, is in respect of sums received by any individual from his/her relative out of natural love and affection. For this purpose, the term ‘relative’ has been defined to include the individual’s spouse, brother or sister of the individual or spouse, brother or sister of either of the parents of the individual, any lineal ascendant or descendant of the individual or spouse and finally the spouse of any of the above-referred persons. Thus, apart from the closest members of the immediate family such as parents, grandparents, children, grandchildren, brothers and sisters, even uncles, aunties and in-laws and the HUF have been empowered to give tax free gifts without any monetary limits. However, cousins, nephews and nieces have been kept out of the list.
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