Tax implication of recieving Gift stocks & Mutual funds from daughter-in-law

Income Tax
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Hello,
I need some help here,
What are the tax implications of my mother recieving gift stocks & mutual funds from my wife?

  1. does my mother need to show the recieved gift in her ITR?
  2. will it come under exempted income?

Thanks

2

Is a gift of stocks & mutual funds from my wife to my mother taxable?

No. In India, gifts received from “relatives” are fully exempt from tax, regardless of the value.

Your wife and your mother are treated as relatives under the Income Tax Act because a mother-in-law is a lineal ascendant of the spouse.
So, the transfer of stocks or mutual funds is not taxable in your mother’s hands.

Does my mother need to show the gift in her ITR?

She doesn’t need to show it as taxable income, because it’s exempt.
However, to keep records clear, she can:

  • Mention it under Exempt Income (Schedule EI) – optional but good practice.
  • Maintain a gift deed or declaration for future reference.

What about future tax when she sells the stocks?

When your mother sells those investments, capital gains tax will apply.

  • Cost of Acquisition: original purchase cost paid by your wife.
  • Holding Period: includes your wife’s holding period.
  • Tax Rate: based on whether it’s short-term or long-term capital gain.

Will the gift fall under exempted income?

Yes. Since it’s a gift from a relative, it falls under exempt income and is not taxed.

Key Points to Remember

  • Gift from wife to mother-in-law is fully tax-free.
  • No tax needs to be paid at the time of receiving.
  • Tax only if and when your mother sells the assets (capital gains).
  • Clubbing rules do not apply here.
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Thanks For your help!