Till date, the I-T assessing officer used to ascertain a certain sum as the "reasonable amount" to be exempt from taxation. This "reasonable amount" was usually the exact amount produced in the form of receipts as part of medical expenses. With the introduction of the finance bill provisions any amount exceeding Rs 30,000 in the financial year will come under the ambit of the gift tax-turned-income tax. Advocate KK Ramani says: "Currently, there is a clubbing provision in the provisions for I-T, whereby minors receiving any gifts would have their incomes clubbed with that of their parents which is bound to be taxable. Even in cases where the gift amount is less than the exempt amountof Rs 30,000, clubbing incomes would always lead to being taxed extra." Section 64 of the I-T Act clearly mentions that the income earned by the minor is to be assessed in the hands of the father. So unless a declubbing provision is mentioned there is no point in having an exemption amount of Rs 30,000.

In case of scholarships, even though they fall under the ambit of Section (10) of the I-T Act and are not treated as income, the problem would arise if persons receiving scholarships are also employees earning a salary. The finance bill exempts educational benefits received from relatives from the provisions of I-T.

According to Harish, "The donee-based I-T can also bring the donor into the tax bracket." Here is an example. Suppose a husband gifts the wife a lakh of rupees, then a sum of Rs 30,000 is exempt. And on the remaining she will have to pay an income tax. And from the second year onwards what ever income she earns from the the money will be clubbed as the husband's or the donor's income from thesecond year and the I-T will deducted under provisions of Section 64.

The definition of `relative' in Section 64 of the I-T Act is restricted only to somebody on whom the donee is dependent.