According to personal finance expert Balwant Jain, gifts between daughter-in-law and parents-in-law are not taxable at the time of making for either party. However, the tax treatment of income generated from such gifts varies significantly based on who receives the asset. As reported by The Economic Times, gifts are taxed in the hands of the recipient only when the aggregate of gifts received from all sources exceeds ₹50,000 in a financial year, subject to certain exceptions.
When assets are gifted by parents-in-law to their daughter-in-law, income accruing to the daughter-in-law is required to be clubbed with the income of the parent-in-law who made the gift as long as the relationship subsists. According to the income tax laws, the parents-in-law and daughter-in-law are included in the definition of specified relatives, which means income from such gifts is taxable in the hands of the parent-in-law who made the gift. As reported by The Economic Times, this clubbing provision applies only when the daughter-in-law receives assets from her parents-in-law.
In the reverse scenario where the daughter-in-law gifts assets to her parents-in-law, clubbing provisions are not applicable and income earned on such assets is taxed in the hands of the parents-in-law. According to the tax expert, neither the gifts received from the daughter-in-law are taxable in the hands of the parent-in-law, nor is the income earned by the parent-in-law required to be clubbed in the hands of the daughter-in-law making such gifts. This creates a clear distinction in tax treatment based on the direction of the gift.
