Giving and receiving gifts is an age-old tradition in India. As we all know that except few, gifts received beyond an amount is taxable in the hands of the receiver. Similarly, giving certain gifts also leads to creation of tax liability on the part of the giver. There are certain situations where giving a gift could lead to tax implications for the giver. These rules have been made to curtail tax evasion and to protect the tax revenues of the government. Here are some of the examples:

1. If an individual has a house property and it is let out for rent but the rent is paid to any of his relatives-- spouse, parents or children--then the rent will be considered as income of the house owner and not the income of the person who actually receives it. In this case, the rent being paid to a close relative of the individual will be considered as a gift by the individual to the relative and the actual house owner will be taxed on it. Hence, gifting the rent directly does not remove the house owner's liability to pay tax on it.

2. It is often seen that parents open bank account in the name of their minor children and deposit money into it. This money is considered as a gift by the parent to their children. For the children, this gift would be tax-exempt. However, for tax purposes, the interest earned from such bank deposits would be clubbed with the income of the parents subject to the applicable exemption, say, tax experts. 

It may be noted that if income of a minor child is not earned through manual work or through application of their skill/talent or specialised knowledge and experience, it is generally clubbed with the income of the parent having higher income. But in situations where parents are divorced, the income will be clubbed with the income of the parent maintaining the child.

Tax experts say in order to ensure that genuine cases of gifting do not get covered under the above situations and be taxed unjustly, it is advisable to maintain sufficient documentation of the gifts given/ received. Taxpayers are also advised to report these incomes in their income tax returns to ensure compliance.