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I know the money isn't taxable when I send it to my parents and they send it to their nephew as it will count as a gift coming in at both places

But if this is done sequentially and soon one after the other, is it taxable?

Someone advised me to do it over different tax years to avoid drawing attention. Is that really necessary?

2

I know the money isn't taxable when I send it to my parents

Yes this is right

they send it to their nephew as it will count as a gift

No this is incorrect Yes. Refer to Income Tax guide on relations exempt under gifts.

Gifts received from relatives are not charged to tax. Relative for this purpose means:
(a) Spouse of the individual;
(b) Brother or sister of the individual;
(c) Brother or sister of the spouse of the individual;
(d) Brother or sister of either of the parents of the individual;
(e) Any lineal ascendant or descendent of the individual;
(f) Any lineal ascendant or descendent of the spouse of the individual;
(g) Spouse of the persons referred to in (b) to (f).
Friend is not a relative as defined in the above list and hence, gift received from friends will be charged to tax (if other criteria of taxing gift are satisfied).​

Even if you assumption were true, i.e. your dad gives it to his brother and his brother gives it to his son ...

But if this is done sequentially and soon one after the other, is it taxable?

The intent is important. One can do it immediately or after few years; if the intent is established that this was done to evade taxes, then you will have to pay the tax as well as penalty.

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  • Hey Dheer, thanks for the reply. How is my assumption incorrect? My cousins mothers brother is my Dad. So by #4 on your list, it shouldn't be taxable right? And the money is really just a gift for sticking by through tough times. How do you establish intent for something like that?
    – GrowinMan
    Oct 6 '16 at 8:43
  • @GrowinMan #4 means you can gift to your Uncle/Aunt as they are brother / sister of your parents.
    – Dheer
    Oct 6 '16 at 8:50
  • But it says gift received from a relative isn't taxed. And relative is defined as the brother of your parent.
    – GrowinMan
    Oct 6 '16 at 8:51
  • If the recipient was the uncle then the gift would be received from the child of your brother or sister, which isn't considered to be a relative as per the text
    – GrowinMan
    Oct 6 '16 at 8:52
  • @GrowinMan Sorry you are right. Got it mixed up.
    – Dheer
    Oct 6 '16 at 9:40

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