Gift by children- to be reported under which schedule

Summary

• Gift by child to parent: A genuine monetary gift from a child to father/mother is not taxable in the parent's hands, as parents are “relatives” under section 56(2)(x) of the Income-tax Act, 1961. The corresponding provision continues under section 92 of the Income-tax Act, 2025.
• Rs. 50,000 limit: The Rs. 50,000 threshold is not an upper limit on gifts to relatives. Thus Rs. 10 lakh Rs. 50 lakh or even Rs. 1 crore can be gifted to a parent without gift-tax merely because the amount exceeds Rs. 50,000.
• ITR reporting: The gift itself should not be reported as taxable income under “Other Sources.” If the applicable ITR provides an appropriate exempt-income disclosure field, it may be disclosed there. The FD interest must be reported as taxable income under “Other Sources.”
• FD interest / clubbing: Where an adult child genuinely gifts money to a parent and the parent invests it in an FD, the subsequent FD interest is ordinarily taxable in the parent's hands. It is not clubbed back to the child's income merely because the child provided the original money. Section 64 clubbing provisions do not generally cover such child-to-parent transfers.
• ULIP: The gift and subsequent ULIP investment are separate matters. The ULIP's own exemption/tax treatment must be tested based on the policy date, premium and applicable conditions.
• Documentation: For substantial gifts, maintain a gift deed/declaration, donor and recipient bank statements, proof of relationship, evidence of the child's source of funds, and FD/ULIP documents showing the parent as owner/investor.
• Mode of transfer: Prefer NEFT/RTGS/account-payee cheque rather than cash. Gift-tax exemption does not override separate restrictions on cash transactions.

Practical structure:

Child's bank account documented gift parent's bank account parent's FD/ULIP parent reports subsequent income.

For FY 2025-26, the relevant provision is section 56(2)(x) of the 1961 Act; from FY 2026-27, the corresponding framework is under the Income-tax Act, 2025.