Repayment of loan between brother and sister does not have any tax implications. However, transfer of money to an individual without any consideration will amount to a gift in the hands of the recipient. There is no gift tax in India. However, income tax is payable on any sum of money, movable property or immovable property received by an individual without consideration (that is, without a quid pro quo), except gifts received from a relative. Under the income tax law, the term “relative” includes (i) spouse, (ii) brother or sister, (iii) brother or sister of the spouse, (iv) brother or sister of either of the parents, (v) any lineal ascendant or descendant, (vi) any lineal ascendant or descendant of the spouse, and (vii) spouse of the person referred to in clauses (ii) to (vi).
Therefore, transfer of money to your sister and vice- versa will not be subject to tax in India.
