No tax on gift to relative

SC Vasudeva

Q. Kindly guide how much amount can be given to one’s sister, son, daughter-in-law and grandson as a gift which is not taxable. A person has FDs worth Rs30 lakh in a bank. He has nominated his son for Rs20 lakh and daughter-in-law for Rs10 lakh. After the demise of the person, will these amounts taxable in the hands of son and daughter-in-law? If taxable, can he make a Will that after his death the amount so received by the nominees (son, daughter-in-law, etc.) be treated as gift from him to avoid any tax? — Satinder Vir Singh

A. Your queries are replied here under:-

(a) An assessee can gift any amount to his/her sister, son, daughter-in-law and grandson. The amount so gifted would not be taxable either in the hands of the Doner or Donee. However, the income earned on the amount gifted to daughter-in-law would be includible in the income of the Donor in view of the provisions of Section 64 of the Act. Further, in case of the amount gifted to a grandson who is minor, income earned on such gifted amount would be includible in the income of either of the parents till such time the grandson attains majority.

(b) The amount received by your son and daughter-in-law after your death would not be taxable in their hands. Currently, there is no inheritance tax leviable in India. It will be preferable to make a Will in respect of your estate to avoid any dispute with regard to properties to be inherited by your legal heirs.

Q. I want to know which ITR form is to be filled by a person who is receiving family pension. I have not taken any medical or health insurance. I am getting medical allowance of Rs1,000 per month. Is any deduction available on purchase of medicines prescribed by private doctor/lab tests and private doctor's fee. Is there any special provision of deduction for senior citizen who is a family pensioner. — Gulshan Kumar

A. (a) You can file tax return for the assessment year 2020-21 i.e. for financial year ending March 31, 2020 in Form No.1.

(b) A senior citizen is allowed deduction towards medical expenditure incurred on the health of the assessee or any member of the family to the extent of Rs 50,000.

(c) The aforesaid deduction would be allowed provided the amount has been paid in any mode other than cash.

Q. I am a non-pensioner housewife and senior citizen aged around 75 years. My total income is only from bank/post office (savings or FD) interest which amounts to around Rs4 lakh only. I possess medical reimbursement bill worth Rs20,000. Kindly calculate my tax liability. — Ranjit Kaur

A. You are not liable to pay any tax on your total income in view of the provisions of Ssection 87A of the Income-tax Act 1961 (The Act). This section provides a rebate from the tax payable to the extent of Rs 12,500 in case the income of an assessee does not exceed Rs 5 lakh. Your total taxable income would be Rs 3,50,000 (Rs 4,00,000 - Rs 50,000) even if medical expenditure of Rs 20,000 is not taken into consideration. You would be covered within the above provision and, therefore, you are not liable to pay any tax on your total income.