I wish to make a cash gift to my minor granddaughter. What are the tax implications of the gift?
Harish Iyer, Chennai
According to the tax laws, a gift received from close relatives (in this case, gift received from one’s grandfather) is not taxable in the hands of the recipient even if the aggregate amount of gifts received in a year exceeds Rs 50,000. However, the provisions regarding clubbing of income of a minor child get attracted. Thus, all such income that arises or accrues to a minor child shall be included in computing the total income of an individual. For example, if the cash gift received by the minor is utilised for making an investment in shares, or depositing in a bank, the income arising there from such savings and investments to the minor child, shall be taxable in the hands of the parent whose total income is greater.
