« Various Acts & Rules » Open DEMAT Account in 24 hrs  Customs Tariff 2009-10 - PART-II - Chapter 98 - Project imports, Laboratory chemicals, passenger's baggage  Customs Tariff 2009-10 - PART-II - Chapter 97 - Works of art, collectors' pieces and antiques  Customs Tariff 2009-10 - PART-II - Chapter 96 - Miscellaneous manufactured articles  Customs Tariff 2009-10 - PART-II - Chapter 95 - Toys, games and sports requisites; parts and accessories thereof  Customs Tariff 2009-10 - PART-II - Chapter 94 - Furniture; bedding, mattresses, mattress supports  Customs Tariff 2009-10 - PART-II - Chapter 93 - Arms and ammunition; parts and accessories thereof  Customs Tariff 2009-10 - PART-II - Chapter 92 - Musical instruments; parts and accessories of such articles  Customs Tariff 2009-10 - PART-II - Chapter 91 - Clocks and watches and parts thereof  Customs Tariff 2009-10 - PART-II - Chapter 90 - Optical, photographic, cinematographic, measuring  Customs Tariff 2009-10 - PART-II - Chapter 89 - Ships, boats and floating structures  Customs Tariff 2009-10 - PART-II - Chapter 88 - Aircraft, spacecraft, and parts thereof «  Foreign consultants' income taxable at lower rate of 15%... The Chartered Accountants Act, 1949... » An amount gifted to a relative will be free of income tax December, 01st 2008 There will be no tax incidence of the transaction on either you or your nephew. This is in view of the provisions of Sec 56 of the Income Tax Act that exempts gifts given to a relative. As per the definition provided in the said section, your nephew will qualify to be your relative and hence any amount gifted to him will be free of income tax. As regards the procedure, generally, it is better to prepare a gift deed and get it registered (with related stamp duty) but such a precaution is normally needed in the case of high-value gifts, particularly those of real estate. For our purposes, all that is required is an offer by the donor and acceptance thereof by the recipient carried out in black and white. In other words, the donor can offer the gift and the recipient should accept the same in writing (maybe through a thank you note). Only then it would be considered as a gift in India. It is preferable to mention the relationship between the donor and the recipient and both parties concerned should keep this document on file for ready reference whenever needed.