The term relative has been used many times and in many places in various sections of the Income Tax Act, 1961 and in each section, meaning to term relative has been given differently according to the need of the section. In this article, we will discuss the meaning of relative as provided under different sections of the Income Tax Act, 1961.
Meaning of relative as per section 2(41)
Section 2(41) of the Income Tax Act, 1961 defines the term relative as follows:-
“relative”, in relation to an individual, means the husband, wife, brother or sister or any lineal ascendant or descendant of that individual;
So as per Section 2(41), relative in relation to an individual means
– husband or wife i.e. spouse of the person or
– any brother or sister of the person or
– any lineal ascendant of person i.e. father, mother, grandfather, grandmother or
– any lineal descendant of person i.e. son or daughter
Meaning of relative under this section is quite short and crispy. Further definition of relative under section 2(41) of Income Tax Act, 1961 is the main definition and if the term relative is not defined specifically under any other section then the meaning of term relative has to be defined according to this section.
Meaning of relative as per section 13
Section 13 of the Income Tax Act, 1961 defines the term relative as follows:-
“relative”, in relation to an individual, means-
(i) spouse of the individual; (i.e. husband or wife of the person)
(ii) brother or sister of the individual; (i.e. brother or sister of the person)
(iii) brother or sister of the spouse of the individual; (i.e. brother in law or sister in law of the person)
(iv) any lineal ascendant or descendant of the individual; (i.e. father or grandfather or great grandfather or mother or grandmother or great grandmother or son or daughter or children of son or daughter of the person)
(v) any lineal ascendant or descendant of the spouse of the individual; (i.e. father or grandfather or great grandfather or mother or grandmother or great grandmother of the person from his/her spouse side)
(vi) spouse of a person referred to in sub-clause (ii), sub-clause (iii), sub-clause (iv) or sub-clause (v); (i.e. husband or wife of person as mentioned in clause (ii) to (v) above)
(vii) any lineal descendant of a brother or sister of either the individual or of the spouse of the individual. (i.e. children of the brother or sister, of the person and his/her spouse)
Meaning of relative under section 13 is more comprehensive as compared to the definition provided under section 2(41) and this definition is required to be used in relation to the matter of trust as specified in section 13 of the Income Tax Act, 1961.
Meaning of relative as per section 56
This is one of the most used definition of relative under Income Tax Act, 1961 and used to determine whether gift received from a relative is taxable or not in the hand of the recipient. Section 56 of the Income Tax Act, 1961 defines the term relative as follows:-
“relative” means-
(i) spouse of the individual; (i.e. husband or wife of the person)
(ii) brother or sister of the individual; (i.e. brother or sister of the person)
(iii) brother or sister of the spouse of the individual; (i.e. brother in law or sister in law of the person)
(iv) brother or sister of either of the parents of the individual; (i.e. brother or sister of father, brother or sister of the mother of the person)
(v) any lineal ascendant or descendant of the individual; (i.e. father or grandfather or great grandfather or mother or grandmother or great grandmother or son or daughter or children of son or daughter of the person)
(vi) any lineal ascendant or descendant of the spouse of the individual; (i.e. father or grandfather or great grandfather or mother or grandmother or great grandmother of the person from his/her spouse side)
(vii) spouse of the person referred to in clauses (ii) to (vi); (i.e. husband or wife of the person as mentioned in clause (ii) to (vi) above)
Meaning of relative as per section 80E
Section 80E of the Income Tax Act, 1961 also defined the term relative. This section state that an individual can take a deduction of interest paid on loan taken for higher education if that interest is paid for the education of individual himself or for the education of his/her relative. So the definition of relative also becomes critical here to determine whether deduction under section 80E is available or not.
Section 80E of the Income Tax Act, 1961 defines the term relative as follows:-
“relative”, in relation to an individual, means the spouse and children of that individual or the student for whom the individual is the legal guardian.
So as per section 80E definition of the relative is restricted to the spouse of the person and children of the person only. However, a person can avail deduction on interest paid of loan for the higher education of a student if he/she is the legal guardian of that student even there is no blood relation exists between that student and person paying interest on loan for higher education.
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