Meaning of "Relative" for Gifts under Section 2(94) of the Income-tax Act, 2025
This article explains the definition of "relative" in Section 2(94) of the Income-tax Act, 2025 ("ITA 2025"), which takes the place of Section 2(41) of the Income-tax Act, 1961 as the reference for tax on gifts, and identifies who falls inside and outside it.
The definition decides whether a gift is exempt or taxable. A gift received from a relative is exempt in full, whatever the amount. A gift received from a person who is not a relative is taxable in full in the hands of the recipient if the aggregate in a year exceeds Rs 50,000. Practitioners reviewing family gifts, especially large ones, need to check the relationship against the statutory list and not against ordinary usage.