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Do you have to pay Income Tax on Gifts Received ? Rules and Exemptions !

by Manish Chauhan · 541 comments

Do you know that, when some one deposits some money in your bank account, what is its taxation angle ? A lot of people take some loan from their friends for few months and then return it back, but never think twice about it from taxation angle? Your parents deposit some money to your bank account because you want to pay the down payment of your house. While it’s a help from your parents, have you ever thought if you have to pay tax on that amount or not?

In this article lets see all the aspects about these kind of transactions, when money comes and goes out of your bank account and what are the rules for income tax on gifts received from relatives or other people in India .

Taxation on Gifts

Let us first see what kind of situations we are talking about ?

  • You swiped your credit card for your friend Rs 20,000 purchase and then your friend paid back money to you by transferring it to your bank account.
  • You asked Rs 50,000 from your friend as loan and paid him back after 1 month.
  • You got Rs 50,000 cheque from your relative on your wedding.
  • Your father transferred some money you your bank account as help for some purpose.

These are few instances, which happens in our lives. But its very important for you to understand the tax implications in various scenarios and the possible issues which can come up in the future, if income tax department decides to scrutinize your income tax returns for example. By understanding the gift tax rules and precautions to take, you will be safe. So now, let’s look at 5 points which will help you understand rules about incomes tax on gifts in a better way.

By virtue of Section 56(2), any sum of money exceeding Rs. 50000 received without consideration by an individual or an HUF from any person is chargeable to tax as income under “other sources” subject to some exclusions . Below we are going to see all those exclusions and gift tax rules.

1. Upto Rs 50,000/year is not taxable

The first major rule which every person should know is that there is no tax to be paid on gifts received (cash or kind), if the amount of the gift is upto Rs 50,000 in a year. However if the total amount crosses Rs 50,000 . Then you will have to pay the tax on the total amount recieved (not additional). For example – If a friend of yours gifts you Rs 30,000 in a given year, you don’t have to pay any tax on that amount, as its below the limit of Rs 50,000 .

Now suppose you also get Rs 20,000 after that, still you don’t have to pay the tax as the total worth of the gift you got in the year was Rs 50,000 till now (less than the limit of Rs 50,000) . But now, if someone gifts you another Rs 10,000 . Your total gifts in a year is Rs 60,000, so you will have to pay tax on the total amount of Rs 60,000 , not just on additional Rs 10,000 . This Rs 60,000 will be included in your income and you will have to pay tax on this Rs 60,000, as per your tax slab. Note that this is exactly how the written law is.

Since 1/10/2009, Section 56(2) has been amended and the scope of ‘’gifts’’ will include even immovable properties or any other property besides sums of money under its ambit.

2. Any amount received by relatives is not taxable at all

Another rule for income tax on gifts, is that any amount received from specified relatives is totally tax free in the hands of recipient. So if a relative gives you gift in form of cash/cheque or in consideration, you will not have to pay any tax on the amount received.

Following is the list of relations which are considered as “relatives” for this

  • Your spouse
  • Your brother or sister
  • Brother or sister of your spouse
  • Brother or sister of either of your parents
  • Any of your lineal ascendants or descendants
  • Any lineal ascendant or descendant of your spouse
  • Spouse of the persons referred  in above points

Example – So if you want to buy a house and your father/mother/sister/brother etc transfer Rs 20 lacs to your bank account. You don’t need to worry about the taxation part, because its a gift from your relatives and you will not have to pay any tax on this amount. However its a good practice to do the documentation for this, if the amount if pretty big like in this example. All you need to do is document this transaction on a paper which clearly states that who transferred the money and the reason for it, along with the signatures of both parties. In future, if there is any income tax scrutiny, this small piece of proof will be handy and will help you a lot.

Important – Note that, there is no income tax to be paid on the money received from relatives, however at times income clubbing provisions may apply, for example, if a husband gifts Rs 10,00,000 to wife, there is no ta to be paid by wife on Rs 10 lacs received, however when she invests that money and if any interest income is generated, it will be clubbed with husband income. Read all about income tax clubbing rules  here.

3. Any amount received as Wedding Gift is not taxable

One of the few advantages of getting married is that any amount you get, as wedding gift is not taxable in your hands, either from relative or non-relative :) . So even if you get Rs 1 crore as wedding gift from someone in your wedding, it’s not taxable in your hands.

Lets see some examples –

Suppose if your spouse parents give you some gift worth Rs 10 lacs on marriage, it will be treated as a wedding gift and will not be taxed. However, it is not clear by provision, whether the gifts should have been on the exact date of marriage, or a few days before or later. Normally, it should be sufficient if the gift is given just on the occasion of the marriage, means either on the day of the marriage itself or a day or two before or after. Practical common sense view would prevail in such cases.

4. Gift Tax on Movable/ Immovable properties

There is a valuation aspect involved in gifting of immovable properties

  • If the property is gifted without any consideration then if the stamp duty value exceeds Rs. 50000/-, stamp duty value will be taken
  • If the property is gifted for a consideration, then the actual value of the property will be taken

In case of other properties:

  • If gifted without consideration and fair market value exceeds 50,000, then the fair market value will be taken as the final value
  • If gifted for a consideration and the Fair Market Value (FMV) less consideration is greater than 50000, then the FMV less consideration amount will be taken as the value of the gift.

5. No tax on the amount received through WILL or Inheritance

When any sum of money or any property is received under a will or by way of inheritance, it is totally exempt from Gift Tax. So if you get a real estate worth Rs 50,00,000 and some other things worth Rs 30,00,000 through inheritance , you will not have to pay any tax on that amount received.

Be cautious about the take and give transactions

At times, we ask for money from our friends for some purpose and then give it back. One of the examples I can give is what I heard from one of the readers in comments section. He swiped his credit card for a friend for Rs 50,000 and then asked his friend to pay him back through online banking. Here if you see, the amount came to his account, however it was a reverse transaction and not actually a gift, so ideally this transaction should not be considered at all.

If its a small amount and can be justified with proofs, there is not much to worry about this. But in this case, lets say there is a income tax scrutiny, and tax inspector asks you about this “Rs 50,000″ coming to your account. Now – You can clearly say that the money you got from your  friend was a amount which you got back because you paid Rs 50,000 to him through your credit card. But just saying this will not be enough, He will ask you to prove it. Then you will have to bring your credit card statement, and prove to him that this was done by you for your friend and no one else.

The point here is – no matters how truthful you are, there should be something you can show to income tax officers in case this is questioned. So for any transaction like this, which involves a big amount, its always a good idea to have a proof, like in the example I just gave, the credit card statement will be handy along with a small note, where you friend signs saying that you swiped your credit card for him and he will pay back the money through netbanking.

In this same case, If you cant prove that this money was just a “reverse entry” , you can imagine the situation. Even if you were clean, the whole amount would be added to your income and you need to pay income tax based on your tax slabs on the ground of unaccounted income.

Another point, worth nothing is that just because you have a reverse transaction, the other party can get into trouble. For example, suppose you give Rs 20 lacs to your friend, who wanted the money for buying a house and then your friend gives back those Rs 20 lacs in 3 months. Note that now there is a clear entry that you gave your friend Rs 20 lacs, so in future income tax department can reach you through your friend and ask you about this Rs 20 lacs and from where you got so much of money. They can ask you to justify the source of this money. So always keep these points in your mind.

How to document Gift transactions, Registered Deed or plain paper?

A gift deed is a deed, that is executed and delivered in which the donor transfers title to the receiver without any payment or considerations. It a document which transfer the legal title of the property to the donor, where the consideration is not monetary but is made in return for love and affection. There is indistinctness with respect to compliance of the gift deed at times, Whether a gift deed is required to be made in every circumstance

When it is required to be stamped OR get registered?

Gift made by way of cash or cheque does not mandatory requires to be executed through a gift deed. Writing a plain typed note on a paper will generally suffice. It is not required to be stamped and registration is also not needed. You may simply mention the names of persons, their relation and that the gift is being given out of love and affection.

Gift made by way of movable property is required to be made in stamp paper and stamped by the notary or court, and registration of gift deed is not required in this case. For the purpose of making a gift of immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor. Gift of immovable property which is not registered is not valid as per law and cannot pass any title to the receiver.

Conclusion on Income Tax on Gifts received

As far as you make the transactions which can be justified, there is not much to worry, however its always a good and safe practice to document things on a paper with proper signatures. This will help you because income tax scrutiny can go back to many years of your life. The stronger your documentation and proof, the smoother will the situation be.

Thanks to Rishabh Parakh (www.rishabhparakh.com), a chartered accountant who helped me while this post and gave his inputs. He is founder  director of Money Plant Consulting (www.moneyplantconsulting.net ) a leading Tax & Investment Advisory service provider in Pune.

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{ 541 comments… read them below or add one }

1 Ashok March 4, 2013 at 10:17 am

Dear Manish,

Reply

2 kapil August 7, 2013 at 7:39 pm

Suppose my friend gives me rs.30000 via net banking and I repay him a a month later via netbanking too.Then will these online transactions act as a proof or do I require hand written signatures of my friend while sending and receiving in case of scrutiny?..One more thing …Can I repay him say after two years?

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3 Manish Chauhan August 9, 2013 at 9:57 am

Kapil

That should be good enough . Just that you should be able to justify this to someone later.

Reply

4 Ashok March 4, 2013 at 10:22 am

Dear Manish,
Me & my brother stay in same house , we pay our house hold bills via his credit card & i make credit card payment via my account & he pays me via cheque, so will this amount will come under my income tax slab.
Thanks in advance .

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5 Manish Chauhan March 13, 2013 at 2:20 pm

Should not be .. just keep a document which accounts it at the end of the year .. should be enough !

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6 Ashish G March 4, 2013 at 11:04 am

Hi Ashok,

Please refer point 2 above, it says amount received from brother or sister is not taxable, so what I understand that it shouldn’t be.

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7 Vijay Zanvar March 4, 2013 at 12:18 pm

The terms “with consideration” and “without consideration” are not explained. Does consideration mean some sort declaration made via deeds?

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8 Manish Chauhan March 4, 2013 at 1:25 pm

Consideration means “For exchange of money” … If you give something to me for FREE, its without consideration .. and if you take money from me in some form, then its “with consideration”

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9 Ashok March 4, 2013 at 3:37 pm

Thanks Ashish

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10 Ashish G March 4, 2013 at 5:04 pm

Dear Manish,

If father gives his married daughter some amount for a small time period and later on daughter or son-in law wish to return the same will the amount still be considered as gift, e.g., my wife gets Rs.X lakhs from her father and later on either she or myself return it to him (Both transactions through cheque and no cash involved) will there be no taxation / no documentation required.

I was going through some gift deed formats and it says, that the amount is given forever but in above scenario it is more like a loan for a small duration.

Regards,

Ashish

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11 Ashal Jauhari March 5, 2013 at 10:47 am

Dear Ashish G, the transaction you are referring to ‘ll be a zero interest loan. Your father in law, gave the money to his d’ter & after a period his d’ter, return the amount to her father. One important point to be noted. If the money was credited to your wife’s account from FIL’s account, the return should also be there from her account. Involving you in the transaction ‘ll create unnecessary problems. In case you are in need of money, you should receive money directly from your FIL & return from your own account.

Thanks

Ashal

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12 Ashish G March 5, 2013 at 11:26 am

Dear Ashal,

Thanks for the clarification. While returning the money, I will take care that the cheque(s) are issued from wife’s account only to avoid any problems in future.

Thanks once again.

Regards,

Reply

13 Manish Chauhan March 13, 2013 at 2:06 pm

Even if you dont give it back , there is no issue , because father can always gift any amount to daughter .. you dont pay tax on it !

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14 Ashish G March 13, 2013 at 2:45 pm

Dear Manish,

Yeah right Manish, but then its like a loan that we have taken and have to return it back… :-)

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15 ankita garg July 18, 2013 at 4:49 am

I have the same query , as far I understand from your really helpful article that my brother can borrow any amount of money from me .but just want to know that if in future he returns that amount in portions (not fully at one time)to me to same account then will it cause any problem for me in any case?

Thanks in advance!!!!!!

Reply

16 Manish Chauhan July 18, 2013 at 2:39 pm

No it should not create any problem, just that you should be able to justify the amount returned and have a clear explaination for it .

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17 vikrant March 4, 2013 at 5:22 pm

Manish,

This is a superb Post, Thanks for writing it.

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18 Manish Chauhan March 13, 2013 at 2:03 pm

Thanks Vikrant :)

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19 Ashal Jauhari March 5, 2013 at 10:49 am

Dear Manish, the article needs a correction. the moment, gifting amount crosses the limit of 50000 Rs. in a FY, the full amount is taxable. Please check the below link for better understanding from the Income Tax site itself.

http://law.incometaxindia.gov.in/Directtaxlaws/act2005/section56.htm

Thanks

Ashal

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20 Vijay Das March 21, 2013 at 10:42 am

Hi,

I am waiting for some reply for this query. Is this Article needs some correction?

Manish Please reply.

Thanks

Vijay

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21 ashal jauhari March 21, 2013 at 1:02 pm

Dear Vijay, You can also check the shared link on your own & read yoruself what I’m telling is there or not.

thanks

Ashal

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22 Vijay Das March 21, 2013 at 1:40 pm

Hi Ashal,

Yes I have gone through the URL and What I understood is if the Gift amount Crosses 50000 it will be taxable but if the same is from any relatives as mentioned it will not be. Since you pointed out this. so was bit ambigous.

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23 ashal jauhari March 22, 2013 at 8:42 pm

Dear Vijay, I pointed out the thing that gifts from non-relatives, the whole amount ‘ll become taxable once it crosses the 50K limit, where as in the article it’s written as only the excess amount ‘ll become taxable. Hope i’m clear to you now.

Thanks

Ashal

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24 Vijay Das March 22, 2013 at 8:50 pm

Thanks Ashal,

Its clear now.. :)

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25 Manish Chauhan March 23, 2013 at 8:56 am

Ashal

I have made the change .. as per law the FULL amount will be taxable , but in realiaty (as per CA) , only the excess is taxed !

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26 Ashal Jauhari March 23, 2013 at 12:39 pm

Dear Manish, thanks for the updation in the article.

Thanks

Ashal

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27 Rishabh Parakh August 30, 2014 at 8:41 am

hi, the entire amount becomes taxable…sad but true.

The entire amount.

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28 Praveen March 5, 2013 at 2:16 pm

Manish,

1.
<<<<<>>>>>

I think it is incorrect when you mention income generated from gifted money is clubbed with husband income.. I think it will be clubbed with husband income only if you are investing money in wife’s name without gifting it.

Once you gift the money to your spouse it is her income and she can invest it the way you want.. How can wife’s income be clubbed with your income..

2.
<<<<<<
One of the few advantages of getting married is that any amount you get, as wedding gift is not taxable in your hands, either from relative or non-relative
<<<<<<

I think above is not correct. Gift money above Rs 50K from a non-relative (non-lineal ascendants/descendants) is taxable.

Can you verify and confirm above points?

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29 Manish Chauhan March 5, 2013 at 2:27 pm

No Praveen

Those points are correct.

1. The clubbing of income happens when an income is generated on money given to WIFE or Minor Child , When you open a investment in wife name or minor child , its the same thing as “gifting” .. At that moment , they do not pay tax on the amount recieved, but any income which will arise out of investing that money will be taxable in HUSBAND hands . This is how clubbing works .

2. Any thing you get on special Occassion of WEDDING is tax free, from ANYONE . Even a non-relative can gift you 1 crore and you dont have to pay tax on getting that money.

Manish

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30 Praveen March 5, 2013 at 2:46 pm

Manish,

So if wife buys an immovable property and later sells at a profit.
Is that profit added to husband income?

Is this treatment applicable if a person gifts money to his brother and brother uses it for his investment purpose and income is generated out of investment?

How can this be called gift and why is there a special distinction/treatment between gift given by a person to his wife vs his brother/sister?

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31 Manish Chauhan March 5, 2013 at 2:56 pm

Yes, if the sources of money was from HUSBAND , then YES, the clubbing of income rules apply and whatever gains/profits are there, will be added to husband income and taxed. THis is only applicable to Spouse and Minor child , like you said in case of brother, once the money is gifted , then any future income arising out of it will not be taxable in the person giving the GIFT .

Note that there are two things ..

1. Taxation at the time of giving the GIFT , this article talks about it ..

2. Once money is gifted , then in all the cases, the recipient is the person who has to pay tax on the interest or income generated, but spouse and minor children are exception here

Reply

32 praveen March 5, 2013 at 11:09 pm

Thanks

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33 Manish Chauhan March 13, 2013 at 1:34 pm

If the gift is given with a motive to save tax and without any proper justification , then clubbing will apply ..

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34 praveen March 17, 2013 at 8:15 pm

Hi Manish,

Can you provide more details on what will be considered as justification and how motive of gift would be/can be arrived at (whether purpose was to save tax or husband really intend to gift the money)?

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35 Manish Chauhan March 19, 2013 at 11:06 am

Thats actually on you to prove .. if you transfer money to your father who already has a 1 crore networth and you say , I gifted it to him , it will not be taken as a valid statement ..

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36 Vinayak March 5, 2013 at 6:27 pm

Hi Manish,

Money received or claim through bearer cheque by any person on behalf of other person , will be considered as income of bearer ? Whats the rule of taxation in this case?

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37 Ashal Jauhari March 5, 2013 at 11:23 pm

Dear Vinayak, can you elaborate your query with an example for the case you are referring to?

thanks

Ashal

Reply

38 Vinayak March 6, 2013 at 10:04 am

Hi Ashal,

I had collected some amount from bank using bearer cheque on behalf of my friends …. bank ask me to attached my ID proof along with presented cheque …. so from banks point of view im receiving the money but im not actually the end user … am just collecting some from bank for some one else …. so do i need to show it to IT ?

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39 Ashal Jauhari March 6, 2013 at 2:30 pm

Dear Vinayak, as the cheque was bearer & your ID is attached, in this case, you are the recipient of the money. Now as you are telling that it was for your friend, the onus lies on you to prove that indeed it was for your friend. From taxation point of view – it’s very much your taxable income if you cqan not prove. So next time, please do not help your friend in such manner which may later result into problem to you.

Thanks

Ashal

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40 Manish Chauhan March 8, 2013 at 8:15 pm

Let me bring in a CA to answer this who has helped me to write this article ..

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41 rishabh parakh March 8, 2013 at 11:15 pm

Hi Vinayak/ Manish,

if this is one of the rare transaction with nominal amount then it wont be an issue and you do not need to show this as such, you should be able to justify the same in case of any queries by the dept. But if you have been receiving money in this manner quite often then it could be added to your income and the same arrangement would also be difficult to justify even though it was genuine…avoid doing this as IT dept has really been keeping a close eye now a days and this kind of transaction will arise unnecessarily doubts & Questions…apart from this i have read couple of earlier comments as well regarding Credit Card payment / receipts…please remember that any money coming “In” or going “Out” should always be justified with suitable documents as otherwise it could be easily treated as an “Unaccounted Income/ Expenditure” and be added to your income for tax purpose.

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42 rishabh parakh March 8, 2013 at 11:34 pm

Very recently i have handled a scrutiny case where in a client has spent Rs. 4.50 lakh during financial year 2008-09 (income from salary was Rs. 25 lakhs)…got the notice in FY 2012 ( because expenses against credit card was more than Rs. 2 lakh ) the same was reported under “AIR” annual information return… see https://www.tin-nsdl.com/air/anninforeturn.php …her case was taken up for scrutiny and he did not have credit card statement & other proofs, it took some time to get it from credit card co. as it belonged to earlier years…So inspite of spending a normal amt via credit card for routine household expenses round the year, we had to justify through proofs and failing so would always entitle Assessing officer to add this expenditure to Income as an Unaccounted Expenditure…so if it can happen to expenses, please understand how much difficult it would be to justify amount as credited…

Reply

43 Manish Chauhan March 13, 2013 at 12:49 pm

Thanks for reply Rishabh !

Reply

44 Manish Chauhan March 13, 2013 at 1:17 pm

Yes ..

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45 Vaibhav March 6, 2013 at 4:34 pm

Hi Manish,
I have query regarding “money received in credit card account”.

I pay my friend’s bill and he transfer money directly to my credit card account using payment gateway.

In this scenario what are the tax implications. Do I need to consider these as “Gift” transactions and document them?

Thanks,
Vaibhav

Reply

46 Manish Chauhan March 8, 2013 at 7:49 pm

Hmm.. this little tricky .. as I am not aware about what happens with the money comes to credit card account . But is it not the same thing as your bank account. I mean when you see your bank statement , does it reflect or not .. I strongly suggest to not do this , just to be on safer side, else in future if things go bad, you should be ready with explainations with proofs . thats the point !

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47 Navin March 19, 2013 at 8:27 pm

I think we are going overboard here with this thing. If let’s say I pay a bill of rs.2000/- for you from my credit card which will be a debit entry in my card. Then you put in the same amount of 2000/- in my credit card from your net banking account which will be a credit entry. Now if someone is doing an audit he can try to find the source of credit entry which would be from your account. Now auditor may ask why is someone else putting in money in my credit card account. I can say I paid my friend’s bill from my credit card so he is depositing the same amount in my credit card. I do not see a problem here. I understand it may be an issue if you deposit the 2000/- in my savings bank account instead of the credit card. Because the savings bank account will have the credit entry but no debit entry for the same amount. As far as proofs go this is as white/clean as possible. I pay a bill for you using my credit card and you deposit the same amount in my credit card using net banking. I don’t see a problem here. Why would someone blame you for such a transaction??

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48 Manish Chauhan March 21, 2013 at 9:00 am

Navin

There is no issue with the scenario, you can do that .. the only question is CAN YOU EXPLAIN AND PROVE IT when required, if you can , then you are safe, but you cant , then its as good as there is some issue . No one will blame you for the transaction

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49 Sushil Girdher March 6, 2013 at 11:06 pm

The Article was good giving a knowledge . I read something knowledgeable after a long time. Waise aajkal kaun kisko money deta hai…nobody gives loan in friendship

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50 Manish Chauhan March 7, 2013 at 9:56 am

Sushil

Thanks for sharing your views on this topic !

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51 Vaibhav G March 10, 2013 at 11:31 pm

Excellent article Manish, cleared a couple of my doubts. Many thanks!

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52 Manish Chauhan March 13, 2013 at 12:01 pm

Great !

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53 Narayanan Iyer March 11, 2013 at 10:36 pm

Hi Manish,

Thanks for putting together this article. I have a question which may sound silly to many, but here goes. Person X gets married and gets Rs. 1 crore as a wedding gift from an indulgent uncle. X will not have to pay a gift tax, but will this 1 crore be considered as X’s income for that financial year and be taxed accordingly, or will the money not be taxed at all, with only the income from the 1 crore gift being taxed ? Thanks !

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54 Manish Chauhan March 13, 2013 at 11:30 am

No Narayanan

The money you get as wedding gift from anyone will not be treated as your income :) .. You dont have to pay any tax on that amount . However now when any income is generated on that money by investing it, that will be your income !

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55 Amlesh March 15, 2013 at 5:07 pm

i need to know if one recieves Rs. 8 crore as gift from grandmother-in-law in fy:2011-2012. would it attract towards scrutiny , and what amount of gift is under the scrutiny norms ?

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56 Ashal Jauhari March 18, 2013 at 12:26 pm

Dear Amlesh, let me answer it. Scrutiny can be done for any one. There is no threshold limit that till X amount, no scrutiny & above X, compulsory scrutiny. Had the person in question received the said amount of 8 Crore. Rs. under a gift deed? Was the transaction doen though a bank cheque/draft/netbanking or cash? You should answer.

Thanks

Ashal

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57 Amlesh March 18, 2013 at 12:54 pm

no,he recieved on the mode of gold

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58 Amlesh March 18, 2013 at 12:54 pm

no,he recieved on the mode of gold ornaments

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59 Ashal Jauhari March 18, 2013 at 1:06 pm

Dear Amlesh, even then, there should be a gift deed for the gold ornaments received. Are these ornaments still under possession or sold back then & there?

Thanks

Ashal

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60 Amlesh March 18, 2013 at 5:05 pm

its still in possession but modified to modern designs and smaller pieces

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61 Amlesh March 18, 2013 at 5:11 pm

and yes its under the deed but the donor is dead now….

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62 Ashal Jauhari March 18, 2013 at 5:11 pm

Dear Amlesh, no the gold is not in possession the moment, you put it for conversion. Yes this is a technical issue. You sold old gold & purchase new one. The sell of old gold ‘ll invite LTCG tax for you even though no actual money was received by you during the conversion. The holding period of fresh gold ‘ll be calculated now from the date of conversion.

Thanks

Ashal

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63 Amlesh March 18, 2013 at 5:18 pm

then what i had to do before conversion,pay wealth tax and get relief

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64 Amlesh March 18, 2013 at 5:21 pm

and yes the gift recieved by me was on the month of my marriage

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65 Amlesh March 18, 2013 at 5:22 pm

but not on marriage date because after few days she was hospitalized(means she was at her last stage)

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66 Ashal Jauhari March 18, 2013 at 5:27 pm

Dear Amlesh, you? why did you hide the fact that you are asking for yourself? :)

Anyway, no matter you received as wedding gift or normal gift. The gifting was free from tax to you. Now I’m not discussing wealth tax yet. I’m discussing the sell part to get it converted into new ornament. There was LTCG tax liability. Now to calculate the tax liability, please do tell me the original purchase date of these ornaments.

Running away from the eyes of Tax people is not possible now a days. :)

Thanks

Ashal

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67 Amlesh March 18, 2013 at 5:30 pm

i was gifted on 05/06/1987

but it came to my force at 2012 feb

68 Amlesh March 18, 2013 at 5:32 pm

and i had modified it at dec 2012

69 Amlesh March 18, 2013 at 5:32 pm

and i had modified it at dec 2012

but still i would like to know that what should be my duty at that time

70 Ashal Jauhari March 18, 2013 at 5:39 pm

Dear Amlesh, can we move our discussion to a pvt. one. Please ask dear Manish to get my mail id.

Thanks

Ashal

71 Manish Chauhan March 19, 2013 at 11:40 am

I think it can be a valid gift as grandmother is giving away her wealth .. but a better way of doing it would be through estate planning .

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72 CA in Vashi March 15, 2013 at 5:52 pm

Thank you sir,for highlighting the question which rises in the people’s mind while receiving expensive gifts.
You have explained it in very simple manner so that even person from non finance sector can understand this.

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73 Amlesh March 16, 2013 at 10:47 am

but i can’t get yours answer

plz help me out of this……

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74 Manish Chauhan March 19, 2013 at 11:37 am

Thansk :)

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75 Ashis Baliyarsingh March 21, 2013 at 1:15 pm

Hi Manish/Ashal,

Everymonth I am transferring some amount(Around 25K) to my parents for their help.
Now I am want to clear his loan & want to transfer 50K to him.

Please let me know if I can show these in my taxation?
What is the rule/exemption if I am giving money to my parents.

Thanks in advance.

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76 Manish Chauhan March 23, 2013 at 10:26 am

You cant get any benefit on this amount, only your parents will not have to PAY any tax :)

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77 VJ March 22, 2013 at 4:05 pm

Hello Manish,
thanks for insightful article. I have a few queries for the below scenario and best way to handle it from taxation perspective.
– I am an NRI. My mother in law bought a property on construction linked plan. For each instalment, I am transfering the money to her account from my NRO/NRE account and she is making the payment to the builder from her account.

– Does the money recieved by my mother in law would be considered as loan or gift and would it be part of taxable income of my mother in law.

– what would be the best way to ensure that mother in law can sell the property back to me. Whether she can issue the option to buy to me for some consideration.

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78 Manish Chauhan March 23, 2013 at 9:10 am

If the house is on your mother in law name, then there is no short cut way to sell the house in yourname . At this moment itself, you can do the agreement with your mother in law for buying the property from her at a defined price, and the payments you are making to her can be shown as the payments . Other wise the money you are giving to her right now , will be treated as a gift to her only .

If you wish to show it as loan , you need to just do a small agreement for loan .

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79 VJ March 23, 2013 at 5:56 pm

Thanks Manish for your response.

Is it possible for my Mother in Law to give me a option to buy the property for pre defined price at some date in futureand it is upto me whether to exercise the option or not. What kind of the legal document would be required for this kind of agreement.

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80 Manish Chauhan March 27, 2013 at 12:54 pm

I dont think this kind of optional agreement is possible

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81 VJ March 27, 2013 at 9:07 pm

Thanks Manish,
So as per your first response that I can do some agreement with my MIL to sell the house to me. What kind of the agreement that would be and what legal documentation would be required for this.

thanks in advance for your help.
VJ

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82 Manish Chauhan April 3, 2013 at 1:30 pm

It has to be normal sale of house agreement ..

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83 ashal jauhari April 17, 2013 at 3:16 pm

Dear VJ, a workable solution is possible, if you are sure that indeed you ‘ll purchase this house from your MIL in future. Please do not show the amount as gift. Please prepare a loan agreement for the total amount that you intend to give to your MIL. Say it’s 40L Rs. Now in the loan agreement mention it as a zero interest loan.

Later on, as & when you are going to purchase the same house in actual from your mother, this very loan which is not repaid by MIl to you can become basis of your payment towards your MIL. Say you ‘ll purchase @ 75L Rs. after few years. so now you need to pay only 35L Rs. as the difference amount & add the original loan amount of 40L Rs. as adjustment towards the price.

Thanks

Ashal

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84 VJ April 21, 2013 at 4:22 pm

Thanks Ashal for your advice.
is there any thing possible in the agreement that my MIL is not able to sell the house to anybody else without giving me first the opportunity to buy or getting the loan repaid.

as always thanks for your advice
VJ

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85 Ashal jauhari April 21, 2013 at 6:19 pm

Dear VJ, to save you from this situation that mother in law may sell to anybody, you have the option to include the house in your loan agreement as mortgage & do not forget to register the mortgage deed.

thanks

Ashal

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86 arti March 30, 2013 at 11:05 am

Hi Manish/Ashal,

My father is retired 4 yrs back, he was a working as salesman in a shop. He has one house on his name bought 20 yrs back, i want give him some big X amount as a giftfor constructing 1 st floor in tht house. I understood frm this article that me & him dont have to pay tax on this gifted money. But, he has not been a income tax payer, does this big moneyin his accont all of sudden can create a problem or is it mandatory to file IT return in this case as he has house on his name, but he is not earning frm last 4yrs. please suggest whether transfering money in his account is fine or there is any other option to handle this.

Regards,
Arti

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87 ashal jauhari April 17, 2013 at 3:10 pm

Dear Arti, please transfer the amount using netbanking. At the same time please do prepare a gift deed on a plain paper that you are gifting 10L Rs. through netbanking of bank …… on date….. From today onwards, you have no right on the gifted amount & Your father is free to use as per his own free will. Both of you should sign it & in case of your father, he should write – I accept the gift with his sign.

This plain paper ‘ll save you & your father from any future trouble. Here i assume you can justify those 10L Rs. as your capital from your known source of income. If not than you are in problem not your father.

thanks

Ashal

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88 divya March 30, 2013 at 8:54 pm

Hi Manish/Ashal,

My Father is retired now, he was working as salesman in garment shop. He has one house on his name constructed 20 yrs back. I want to give him some X amount of money for construction of 1rst floor in this house. I understood from this article that gift tax will not be applicable on me & for my father as well. But as he is not working from last yrs so there is no income & income tax was never filed by him as income was low. Now is it mandatory to file ITR after taking this gifted money and he own a house on his name?? & is it fine if I directly transfer this big amount directly into his account or should i give him cash??. Please suggest what is the best solution in this case.
Regards,
Divya

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89 Manish Chauhan April 3, 2013 at 10:32 am

Given your case, there should not be any issue here .. just transfer the money to him and let him use it

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90 Prabhu March 31, 2013 at 7:08 pm

dear Manish,
This is indeed a highly informative article. Please clarify a doubt of mine which has not been explained in the article. My father-in-law had given a sum of Rs 10 lakhs to my wife as gift for purchasing our house. Though the amount is not taxable, is my wife required to show it in her IT return. If so under which head?
Thanks in advance

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91 Manish Chauhan April 3, 2013 at 10:00 am

I think it would be a very good thing to file a IT return for this . It will officially be on white papers .. meet a CA for this .

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92 ashal jauhari April 17, 2013 at 3:06 pm

Dear Prabhu, who is the owner of the house in question? You alone or both of you or your wife alone? Please clarify.

thanks

Ashal

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93 Prabhu April 17, 2013 at 3:19 pm

Dear Sir,
Me and my wife are joint holders of the house.
Prabhu

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94 ashal jauhari April 17, 2013 at 4:03 pm

Dear Prabhu, she may show the amount under the head tax free income. As it’s received by her from her father.

thanks

Ashal

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95 S Ghumre April 1, 2013 at 12:42 pm

Hi Manish.

I have received insurance proceeds after the death of my husband in the US. Now I have moved back to India and I want to get the money transferred from my bank account in the US to my Indian account. I work as an IT professional.

Would there be any tax implications of this money while doing the transfer?

Thanks,
Ms. Ghumre

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96 Manish Chauhan April 3, 2013 at 9:31 am

did you get the money in US from a US company ? I am not very sure of this kind of transaction. Do you know US rules if the money you get from insurance is taxable or not ?

Try to post it on forum also – http://www.jagoinvestor.com/forum/

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97 gaurav April 2, 2013 at 4:36 pm

few months back my brother gifted me 10lakhs(from his FDs) due to my financial situation.
i took it but now i want to return him in steps as my financial situation is
gradually improving. now after reading your article i am worried as i do not have any record of that money spent .
what should i do?

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98 Manish Chauhan April 3, 2013 at 8:45 am

You can repay him back , just take a document from him that its a loan .

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99 gaurav April 3, 2013 at 9:54 am

thanks manish
i think just plain document is enough

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100 Manish Chauhan April 3, 2013 at 10:27 am

Yea

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101 Arun Sharma April 4, 2013 at 12:31 pm

This is a great article. I have never read such a well explained and comprehensive article on the tax imposed on gifts in India. All elements of this area have been covered and it will definitely make people think before randomly transferring money into accounts and make them think about taxation. Do post more such articles on other areas of income tax where one can save taxes such as home loans and capital gains

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102 Manish Chauhan April 6, 2013 at 11:52 am

Sure Arun .. will do so

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103 sathwik April 9, 2013 at 3:45 pm

Hi manish ,i would like to ask one question.In my home town some private chits are going on so monthly i will sending some amount to my dad’s account for chits.Finally on one day i will be getting the amount after closing the chits.The amount which i get in return from my father will be taxed ? If we see the money which i have paid is my salary. For example i will send 5,000 to my dad’s account for chits for 15 months.After closing chits i will be getting around 1 lakh instead of 75,000 which i sent for my dad for 15 months , Now if my dad transfers money 1 lakh to my account whether the 1 lakh will be taxable ?

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104 Manish Chauhan April 12, 2013 at 11:48 am

Not all , but atleast the difference amount of 25k .

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105 Gopal March 12, 2014 at 4:21 pm

Hi Manish,
This is one of the best article I hv gone thru & I congratulate u
for the commendable job to update the needy peoples.
I hv one small querry ;-I want to pay some money to my daughter to purchase the FOREX for going abroad. will it be taxable. Iwill not be taking it back.
I will transfer it thru bank. Kindly advice. Once again thanks.

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106 Manish Chauhan March 12, 2014 at 4:48 pm

It will not be taxable for DAUGHTER . You can pay her only from your after-tax income . There is no way for GIVER to save tax ever by gifting !

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107 Rais Ahmed April 14, 2013 at 10:28 pm

Dear Manish ji,
Thanks for such a nice article on gift tax. May I want to know, if father of a daughter gives some amount as gift to her daughter in the form of cheque to the account of his son in law. Will this will be taxable for son in law.
Regards

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108 ashal jauhari April 17, 2013 at 3:03 pm

Dear Rais, is the amount is meant for D’ter, it should be paid by checque to her account. In case the father wants to gift to his Son in Law, he can do so directly. no need to make issue complex by gifting to D’ter & amount received by Son in Law.

Thanks

Ashal

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109 Manish Chauhan April 19, 2013 at 11:52 am

Yes it can ,if its proved that it was done just to avoid the tax !

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110 NAGARAJA SHARMA April 25, 2013 at 3:22 pm

Dear sir,
thanks for a valuable article.
my question is
one of my freind is going to tranfer (through electronic transfer ) 3 million US Dollars to my savings account for investment purpose in India,

1) what is the procedure to do a transaction ?
2)is there any permission or intimation is required by RBI
3)if the transaction is happen what are taxes i have to pay to the Government ?
4)is this ia money launering ? if so what to do ?
5) shall I give my bank account number to him ?
plz help me , whether i have to proceed or not ?

thank you sir,
yours sincerely
NAGARAJA SHARMA

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111 Manish Chauhan April 25, 2013 at 3:52 pm

3 million US dollers is a big amount .. If its coming to your account. I am sure its going to be into income tax department radar. Be ready to explain things . thats all ..

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112 Ashal Jauhari May 1, 2013 at 5:36 am

Dear Nagaraj, why your friend is not investing under his own name? To make things simple for you, it’s advisable to enter in a loan agreement with your friend & then only receive the amount under this loan agreement. If you do not opt this loan agreement thing, the amount received by you ‘ll be treated as your income & you w’d have to pay tax on the full wired amount i.e. 3 million USD. Now @ 30.9% Tax slab, you ‘ll lose nearly a 3rd part of your amount in income tax.

So think a lot & then only act.

Thanks

Ashal

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113 NAGARAJA SHARMA April 25, 2013 at 4:19 pm

Dear Sir,
Thanks for your reply,
if iam ready to pay tax accordingly to the Income tax dept. what are the consequences am going to answer or face .
if paying tax is enough or i have show reasons for the banking transactions?

plz help

thank you sir
NAGARAJA SHARMA

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114 Manish Chauhan April 26, 2013 at 10:51 am

If there is a scrutiny , then tax department will dig the matter to the level you cant imagine . That will really be a tough situation if you have not paid tax honestly . Better pay your tax faithfully/legally and do not create tough situation later !

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115 P Gupta May 6, 2013 at 5:10 pm

My wife is getting a cash gift of upto Rs 25 lac from her parents as a token of love. What is the tax liability for her?

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116 Manish Chauhan May 6, 2013 at 5:25 pm

No tax liability ! , as its coming from parents . Once she invests that money , then the income she gets as interest will be treated has her income , but even in that case it would mostly be less than 2 lacs a year, which is again not taxable !

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117 Aditya Maheshwari May 28, 2013 at 5:46 pm

Sir,

In my slarary account, there are two credit enteries of Rs. 49,000 that too of cash. Rs. 49,000 + Rs. 49,000 was deposited in my account by my Father-in-Law. As, the amount was deposited by my Father-in-Law, i am not supposed to pay any Tax over it. However, how it can be justified as the said enteries are in cash?

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118 Manish Chauhan May 31, 2013 at 5:00 pm

You cant ! .. Anything in Cash can not be justified and never take it like that !

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119 Raghava May 28, 2013 at 9:01 pm

First of all, I thank profusely Mr. Manish for this wonderful, eye opening article. Simple yet precise and very informative. Great Sir.
I have a question. I am in need of some money and my wife’s brother is ready to give me loan. He wants to transfer amount through net banking to me. Is this money tax free , as far as I am concerned. What I understand from your article, it is non taxable for me. Is it ok if he transfers this money to his sister’s account (my wife account)? Since my wife is house wife, and not earning, is this fine? As you said, I think myself and my wife’s brother should get into a loan agreement on a plain paper , duly signed by both of us. Am I right? Is that required? Is there any limit on the amount I can get? He wants to give me few Lakhs.
regards.

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120 Manish Chauhan May 31, 2013 at 4:56 pm

It would be better if you take it as loan , Is will be taxfree for your wife, not you !

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121 Raghava May 31, 2013 at 6:30 pm

Yes Sir..Thats what I meant. If myself and wife’s brother sign off a loan agreement on a plain paper, it should ok for me right? I need not bother about tax on this amount right? In case if he wants to transfer amount to my wife, then there need not be any loan agreement ? Have I understood it right?

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122 Ashutosh Pathak June 3, 2013 at 5:02 pm

Dear Sir,

I am a practicing CA at Kanpur. I seek your opinion in one of my practical problem.
Kindly guide me.

Facts of the case: Mrs. A married to B in Jan. 2013. After returning from their honeymoon, a ceremony
of Kitchen Entry was performed in April 2013 at B’s house. Mrs. A received gifts of Rs. 15.00 lakhs
(all by cheques) each from C( B’s uncle, Tau), D (wife of C, Tai), E( C’s son) & F( wife of E).

Now, kindly enlighten me, that can these 4 gifts of Rs. 15.00 Lakhs each can be treated as marriage gift/Gifts from
Relatives or both and will be exempt from tax?

Thanks.

Yours sincerely
CA Ashutosh Pathak.

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123 Manish Chauhan June 4, 2013 at 3:24 pm

I am not that clear on that .

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124 Anandana June 12, 2013 at 11:54 am

Dear Manish,

My FIL has given 20lacs for a house we are buying. The house will be only in my husbands name. Would he have to pay tax on this? Reading earlier common says no but a link i found says that the son would have to pay tax?

Pls advise.

Regards

Anandana

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125 Manish Chauhan June 14, 2013 at 11:10 am

No , he will not have to because its a gift from father to son . Nothing to worry . Just take a declaration from father on a piece of paper, that its a pure gift out of love and sign it . Thats all

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126 Nikhil June 18, 2013 at 11:20 am

Hi Manish

I make a lot of transactions from my one account to other (both have same PAN number). By accumulating my salaries I saved substantial amount in my account. Now I gave around 2 lacs to my friend and he gonna give it back within 6 months (both transactions via NEFT).

So I have a proof here of giving 2 lacs and then getting back 2 lacs. There is no documentation though. But my bank records would justify the reverse transaction.

Do I need to worry about additional tax here ?


Nikhil

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127 Manish Chauhan June 21, 2013 at 12:37 pm

Yea this should be fine . Better avoid doing this if possible ,just be ready to prove it to IT department in future if you are asked for !

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128 Nikhil June 21, 2013 at 12:53 pm

Thanks Manish!

One last thing; we(me and my friends) pay our rent also by NEFT. Now; I pay the whole rent while my roommates NEFT me their share every month. Similarly, I receive some money every month from my friends which I had lend them earlier. These type of transactions usually amount to 20-25 k every month (all money coming to my account).
After reading your article; I feel a little discomfort here; coz there is no reverse transaction. What should I be doing here? Doing these simple transactions online helps a lot in managing debts/rent etc BUT poses this income tax worry!

Is getting a written copy stating the money received from my friends is just rent and debt be fine ?

Lastly, can IT dept scrutinize me for my current FY income after 5-10 years ? Who would remember about these transactions and their purpose at that time ?

Thanks a lot in Advance
Nikhil

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129 Manish Chauhan June 21, 2013 at 3:30 pm

thats what most of the people regret after 5-8 yrs when they are in IT tangle . I can understand your situation totally as I have been doing these things a lot when I was student , it makes life easy . But only you know what money is coming in your account and for what purpose. Imagine I am tax officer and I come to you after 5 yrs for some IT issues, then I ask you to show me your income for last 8 yrs (IT department can go that deep) .

then I ask you about these transactions and tell you that these amount which are coming to your account is your income because it came from some other account. I can accuse you of doing some work and taking payments . Now forget the reality, how will you convince and prove me that it was not income ?

All you can do is keep telling me that it was not your income , But where is the proof ? It can happen that in reality you are really taking payment for some work you are doing and are lying to me that they are your friends and paying you rent . Are you getting my point .

So here is what you should do

1. First, as far as possible avoid these things as much as you can. I am not saying dont do it , because life will be mess without it . But where ever you feel , it can be avoided do it .

2. For higher amount transactions, always better to take a paper and get it documented.

Manish

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130 ashutosh July 3, 2013 at 2:30 pm

do we need to document the gift amount received from relative to income tax return filling or no need to do.
regards
ashutosh

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131 Manish Chauhan July 5, 2013 at 10:20 am

Not for small amounts, but any documentation is always a good idea !

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132 ashutosh July 14, 2013 at 8:13 pm

Sir
Please help on any documentation is always a good idea-not necessarily in income tax return

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133 Manish Chauhan July 15, 2013 at 12:07 pm

Yes, one has to be very strong in his documentation !

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134 SChintha July 7, 2013 at 5:23 pm

My mother owns a plot which she intends to give both me and my sister. Now we decided to sell the plot and share the amount amongst both of us. I understand from this column that the price amount shared between, we two sisters is exempt from tax as we can say it is gifted by my mom. My mother is a retired state govt. employee. How will this sale amount effect her Income tax returns. Will she too be exempted from Income tax as she is gifting the amount through sale transaction to both her daughters.

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135 Manish Chauhan July 15, 2013 at 2:08 pm

the tax angle will come as soon as the plot is SOLD . If its sold after you get it as gift, then you pay the tax ,else your mother.

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136 Anil July 8, 2013 at 6:07 pm

My wife runs a proprietory concern having about 4 lac pa of business income and rental income from one commercial shop. I am a salaried servant.I have , over a period of 2 years given a loan of approx 16 lacs to my wife.This amount has been used by my wife for buying a plot and a residential apartment. Currently we are staying in a parental house.My father has recently expired(about 7 months back) and I shall inherit this house in which we are presently staying. Last year I showed this amount given to my wife as a loan.Can I just show this amount as a gift as I think it would be better not to have my name in my wife’s balance sheet.What are the tax implications for both of us.

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137 Manish Chauhan July 15, 2013 at 1:41 pm

Why dont you want your name in the balance sheet ? If its saving you money legally , you should do it . More than me, a good CA should be able to help you on this .

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138 DN July 19, 2013 at 7:36 pm

Hi Manish,
My father has gifted some money to my sister (major) – now will my father get any benefit on this from Tax point of view?
Is this amount is exempted from my fathers income? If yes, then in which section of the ITR does he mention it? Also what documentation he needs to maintain in case of a future scrutiny.
I have read many articles on this topic but couldn’t figure out this. Your inputs on this will be helpful.

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139 Manish Chauhan July 20, 2013 at 1:28 pm

No tax benefit , No exemption

The only tax benefit is that you sister will not pay tax on getting this amount.

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140 rama July 21, 2013 at 2:31 am

Hi Manish. I am confused about Gift Tax on Movable/ Immovable properties. When you say that there is a valuation aspect involved in gifting of immovable properties does it mean that if my mother gifts me a house say 50 lacs without any consideration then I will have to pay tax on 50 lacs? If yes, then how much?

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141 Manish Chauhan July 29, 2013 at 6:05 pm

No , You will not pay tax just because she gifts you . But when you sell the property , you need to pay tax exactly the same way she would have paid .

But when she gifts the property to you, you will be paying the Stamp duty and registration charges which registering it on your name.

Manish

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142 Manoj July 27, 2013 at 2:13 am

Hi, a simple query …. if I have received a gift from non relatives of say Rs. 30000 and my minor son has received Rs.30000 from a non relative, do the clubbing provions apply and do I have to pay tax on the whole rs 60000 ?

Also, where in the ITR2 form do we have to reflect the gift received from relatives / non relatives ?

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143 Manish Chauhan July 29, 2013 at 5:35 pm

I think it will not be clubbed and you should not worry on this . You dont have to mention it .

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144 Navin July 29, 2013 at 11:18 am

Very informative article and Q&A. One of the best on personal income tax.
My understanding from the article is that for money transactions between relatives as defined above clear track/ record should be maintained.
Please confirm if the money is transferred through cheque payment (bank records can be easily pulled up) getting documentation even on plain paper is desirable but not mandatory for amount totalling 25 lakh per year.

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145 Manish Chauhan July 29, 2013 at 5:08 pm

You should also ways have proof of money going out and coming in as far as possible because when tax department raises issues, then the life gets hell !

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146 Rajesh Subudhi August 2, 2013 at 10:30 am

Thanks Manish & Rishabh for this superb article. It clarified majority of my doubts about gifts and its tax implications. The article and other query response majorly explained abt tax implications from recievers point of view, but what about the lender/donor perspective. Suppose from my salary income I transfered INR 75000 to my wife’s account and as I understand from this article its tax free from my wife’s perspective but what about tax implication from my side. Is this 75K won’t be considered in my taxable income for that FY since I have gifted it. If its Tax free from donors side, then what kind of documentation is required. Can you please explain the tax implications from donor side.Thanks in advance.

Rajesh

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147 Manish Chauhan August 5, 2013 at 12:24 pm

Rajesh

In no case, its tax free from donors side :) . The thing is this tax angle comes into picture on your “after-tax” income .

Manish

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148 Rajesh August 5, 2013 at 12:30 pm

Thanks Manish.

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149 vihar patel August 3, 2013 at 9:51 am

Very Nice Article. Really solve mystery of gift tax.

One question .

My father gives my mother a 2,00,000 by cheque . I understand that it is totally tax free for my mother.

But my mother invest that amount in Fixed Deposit.So clubbing provision is arise.

i want to know how that interest is taxable for my father?
suppose 20000 a year interest on that FD. I fill 15H for that . But how can my father saw this in his return and my mother can saw it in her return?

is it 50%-50% rule ?

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150 Manish Chauhan August 5, 2013 at 12:10 pm

No , it will be counted as father income and he has to pay tax on it

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151 Amit August 4, 2013 at 10:57 pm

Hello,
this article of cleared some problems of mine but there is a sitution i wanna ask about.

my mother recently sold her property and got a lot of money. Now she is willing to give me arount 50 lakhs to me through check. i just want to know if this money that i recieve will still be treated as gift and therefore tax free ???

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152 Manish Chauhan August 5, 2013 at 10:14 am

Yes, it will be tax free to you on receiving !

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153 mahender August 5, 2013 at 9:42 am

my brother gives about Rs5000 or sometime more in cash montly to my mother and fatehr for expenses,bills etc
so can this can be shown as gift income under other income in my mother ITR while not having document proof of such transaction
please explain about this transaction
in article their is a word considration or without considration; what it(consideration) means?

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154 Manish Chauhan August 5, 2013 at 10:12 am

If its given in cash, its anyways not a recorded transaction . You should not worry about it. “Consideration” here means “In exchange of money”

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155 mahender August 5, 2013 at 12:54 pm

sir,thanks for reply and
if i want(actually if i show these as other inocme in mother’s ITR it remove lot ot mesh) to show this amount in my mother ITR so can i show these in ITR as you say these are not recorded transaction.
and please tell how should my mother should get money from my brother so that we can show that money as their inocme in other sources income with proof?

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156 Manish Chauhan August 5, 2013 at 12:59 pm

But what is that money for ? If its just a transfer from brother, it can be given just for helping her, in that case its not INCOME .

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157 mahender August 5, 2013 at 1:17 pm

if the amount given by my brother to my mother is more than Rs50000 and the income of my mother is less than taxable income(including this gift amount) then their will be no tax need to pay by my mother , am i right?

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158 Manish Chauhan August 5, 2013 at 1:27 pm

Even if its more than 50k, she does not need to pay any tax , as its coming from son ! , which is exempt totally

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159 mahender August 5, 2013 at 1:31 pm

sir
the situation is as below
my mother income from commission from post office is Rs52000FY2012-13(tds deducted on this)
and on her name their is also an agriculture loan(kisssan credit card) but not got any income from agriculture and we had paid this Rs100000 loan in the FY2012-13
the loan is payment may shown as from here income and money taken from my brother and this money borrowed from my brother i want to show as other source income to justify payment of this loan.
please give any suggestion in this case.

In Reply of your reply
they money is given by my brother is about Rs5000 monthally for helping here but only in cash , not any recorded transaction.

sir,why you say that it not counted as income while in article you have written that gift should be shown under other source of income, please clearify

Thanks and kind regards

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160 Manish Chauhan August 5, 2013 at 2:23 pm

I think your case requires a CA to look at

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161 mahender August 5, 2013 at 2:03 pm

sir
if you not have reply about above question,
please tell what is proper way to get money as gift for a mother from her son in such way that she can show it as other source income

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162 sushant rohilla August 13, 2013 at 9:47 pm

hi manish

thanks for this wonderful article.
i have 2 questions—
Q1. my grandmother wants to gift an agriculture land to my father worth rs 800000/. will there be any tax implications for my father? if not shall a registered gift deed be made?
Q2. i recently went through an operation for kidney stone , and as i am already insured , insurance company paid me rs 35000/ for the same, 2 months after the operation ( as the hospital was not on there panel and so cashless mode was not applicable). Will this 35000/ be considered my income and will i have to pay tax on this?

thanks in advance
sushant rohilla

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163 Manish Chauhan August 21, 2013 at 2:31 pm

1. NO tax. Obviosuly a gift deed has to be made otherwise how will it be transferred on the name of your father ?

2. No , You dont have to pay tax on this .

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164 Rishi August 20, 2013 at 3:30 am

Hi Manish,

Splendid article. I have a very specific query though which could not be answered by above. My parents live in India and my dad has retired and hence has no income. So he has not been filing IT return for last 2 years. This year my mom received around 30 lacs in her bank account from her father’s brother (so collateral not lineal ascendant). The amount was received via cheques in her name issued from her father’s brother account and is intended to be used for house buying later by my parents. So my parents transferred this money into a joint account in my dad and mom name and put it in Fixed Deposit (all in same bank). Now my dad is filing his returns and are concerned about the following:
1. Are they liable to pay any tax on this amount? The money is all white and tax-paid from my mom’s father’s brother’s end.
2. Under what heading should my father should this amount in IT return form.
3. What kind of documentation should my parents keep for any future issues that may arise?

Thx very much for your help.

Rishi

Reply

165 Manish Chauhan August 21, 2013 at 12:34 pm

1. NO , no tax on that money ,but any interest when earned on that money will become income

2. NA

3. A simple document stating that its a GIFT from brother to sister will be enough

Manish

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166 Rishi August 21, 2013 at 12:59 pm

Hi Manish,

Thx for the response. Just to highlight that my mom received money from her Chacha (father’s brother) and not from her brother. This money was then put into joint account in my dad and mom name and put in FD. Do your answers remain same?

thx

Reply

167 Manish Chauhan August 21, 2013 at 1:20 pm

Yea . just a note with signature would be a good enough

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168 narayan August 24, 2013 at 10:57 pm

Hi,
it is wonderful article helped in many ways.
i have a general and common query happening now a days.
if anybody gets huge sums by selling property,then will that be considered in income tax.just wondering.

confused on this,please help.

Thanks,
Narayan

Reply

169 Manish Chauhan August 29, 2013 at 2:08 pm

Definately . you have to pay the tax on profit .

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170 narayan August 26, 2013 at 6:04 pm

Hi all,
have a basic question to ask.
If anybody sell his/dad’s property and get huge amount of money.
then will that be considered under income tax.

Have no idea,please pour suggestions and ideas

Thanks,
narayan

Reply

171 Manish Chauhan August 28, 2013 at 10:56 pm

Obviously . Why will there not be income tax ?

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172 Rajesh Mehta August 29, 2013 at 7:29 pm

Hi Manishh,

Hoping you reply on following query –

I have purchased one house with complete amount paid by me but I have coowner name of my wife in the agreement. Now, I want to gift this house to my mother who is senior citizen. I an to have information with respect to following points –

1. Can I gift the house in partial Only of my share (50%) to my mother? Do I need any document to be signed by my wife?
2. I understand I need to pay stamp duty and registration .. is this of partial or full?
3. Will my mother will require to pay society transfer charges? How much?
4. Also, if they decide to rent this house? does the rental income is part of my Income? if yes, how many %?
5. In case in future my wife and Mother decides jointly to sell this property, what is the Income tax effect me?
6. Also, can they sell this house in same financial year as of the gift?

If you can help me answer above queries?

Thanks

Rajesh Mehta

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173 Manish Chauhan September 3, 2013 at 2:33 pm

Rajesh

You can only give your share of house . If its co-owned by someone else. ALl the consent it required by other party for their share !

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174 Rajesh Mehta September 3, 2013 at 8:36 pm

Thanks Manish. any update on the other points?

Rajesh Mehta

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175 Manish Chauhan September 7, 2013 at 5:46 pm

2. Partial
3. Yes, but amount is decided by society , how can I tell that
4. It will be owners income, thats your mother (for 1/2 part)
5. You are not in picture . you have already gifted it

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176 Ashal Jauhari September 8, 2013 at 9:50 am

Dear Rajesh, a small correction in dear Manish’s reply above. As all the money to purchase the house was provided by you & wife’s name was added as a co-owner for practical purpose only, she has no claim on the house ownership in your presence. Yet her consent is required to gift (actually reregistering the property in your mother’s name) to your mother for the simple fact that in property registrar’s office presence & consent of both owners’ is required.

Thanks

Ashal

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177 Rohit September 2, 2013 at 11:54 am

Dear Sir

My father have recieved ancestoral immovable property in jwellery form under a will,
which has been converted in stock on market for doing business after 10 months of death of my grand mother. Do my father is liable to pay any tax on such amount.

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178 Ashal Jauhari September 8, 2013 at 9:52 am

Dear Rohit, inheritance is tax free. The income generated from the stock in trade ‘ll be taxable as usual.

Thanks

Ashal

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179 Rohit September 9, 2013 at 11:32 am

Thanks Ashal

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180 Krishnaprasad September 2, 2013 at 6:24 pm

Hello Manish,

Thanks for a nice article.

Following is a case where I need advice.

A Senior citizen, gets some amount by selling a property. He pays the Capital Gain tax. Remaining amount he keeps as term deposits in banks. He gets interest on the deposits and pays tax on them as per the slab.

He gifts some amount to his senior citizen wife (who has a PAN number) through a gift deed. This gifted amount is kept as a deposit and interest is received on it.
Now the interest on the gifted amount is whose income (Hisband or Wife)?

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181 Manish Chauhan September 3, 2013 at 12:25 pm

It will be wife income in this case !

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182 Ashal Jauhari September 8, 2013 at 9:53 am

Dear Manish, you are wrong here. The FDs are in name of wife but actual money is from husband so the income from such gifted FDs ‘ll be taxable in the name of husband only.

thanks

Ashal

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183 Ankur Marwah September 4, 2013 at 9:00 am

I just want to understand few points:

If I transfer money to my mother’s account (she’s is housewife) and she invest this money in Fixed Deposit with her name and earns interest,

1.) Will this gift from me to my mother is taxable?
2.) How should she needs to reflect this gift amount while filing IT Return?
3.) Is profit made add to my taxable income?
4.) Will this transection required to execute a formal gift deed?
5.) Considering my father is employed in government service, so in that case will the interest income received from such gifts will be clubbed in my father’s income?

Thank you in advance,

Reply

184 Manish Chauhan September 7, 2013 at 5:37 pm

1. Its taxable in her hands.

2. I dont think she has to , because its not income as such , but a GIFT . Your CA will take care of this

3. No , its her income

4. No, not needed

5. No

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185 Ankur Marwah September 7, 2013 at 7:11 pm

Thanks Manish for answering all queries. This is really helpful.

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186 Ramya September 4, 2013 at 8:47 pm

Hello Manish,

If my husband transfers 5 lacs in my a/c for the purpose of paying to builder. I mean this amount will again RTGS to builders a/c after a month, will it impose any income tax impose on me?? ( I am a housewife)

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187 Manish Chauhan September 7, 2013 at 5:10 pm

No it will not . You just need to have all the proof that it went to builder , you cant take out cash from ATM from your account and say it was given to builder , It has to be through Cheque or NEFT/RTGS (like in your case)

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188 Ashal Jauhari September 8, 2013 at 10:00 am

Dear Ramya, a counter query from me to you, why your husband is not paying directly to Builder from his own account? Can you provide the logic or reason behind this set up?

Thanks

Ashal

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189 Rajesh Mehta September 7, 2013 at 7:30 pm

I am a salaried person and I have purchased one house in June 2001 with amount of 9 Lacs. I have paid 4L from my savings and reset 5L from house loan. I have already repaid this loan.
So current situation is –
1. I have joint / co-owner name of my wife in the agreement.
2. Currently House is rented

Question – 1. Can I gift the house in partial only of my share (50%) to my mother?
My Understanding: I can gift share of 50%. I shall prepare a gift deed, pay registration charges and society transfer fees (if any). Please confirm

Question – 2. What happens to rent income?
My Understanding: After transaction date the rent income can be parted between my wife and mother and I am not impacted.

Question – 3 In future if wife and mother decide to sale the house?
My Understanding: Generated sale value an be shared by them and they can pay capital gains (short / Long) or invest this sale income separately and/or jointly as per their need.
Please confirm my understanding for all above 3 questions and / or add your thoughts with respect challenges faced from income or tax point of view.
Thanks
Rajesh Mehta

Reply

190 Manish Chauhan September 18, 2013 at 9:18 am

Rajesh

Your understanding for all 3 points is correct

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191 Ashal Jauhari September 8, 2013 at 9:59 am

Dear Rajesh, as you provided all the money to purchase the house, from taxation point, you are 100% owner of the house. So you can gift the house to your mother but from property registrar’s point as your wife is a co-owner, you need her sign & consent also.
For 50% sharing between your mother & wife for rental income, actually it ‘ll be mother & you as I already mentioned from taxation point, you are the real owner for your wife’s share also.
Same thing ‘ll happen at the time of sell. Capital gains ‘ll be between your mother & you only.

Thanks

Ashal

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192 Anant September 10, 2013 at 8:24 am

Dear Manish excellent article and great help for non finance people like me.
Myself and my wife both are NRIs. I need to transfer 30L from my NRE a/c. to herNRE a/c for purchase of house.
It is clear to me that there will be no Gift tax applicable to her, but will the income derived from the purchased house be clubbed with my income?
To avoid clubbing of income, should I gift it first to my adult son and in-turn he gifts it to his mother?
Other option is that I can repatraiate the money and send it to her a/c. but it has a cost associatedwith it. Thanks in advance.

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193 Manish Chauhan September 18, 2013 at 8:58 am

If you are doing all this just to avoid the tax, then its a problem, but otherwise there will be no issue in transferring money to her and buying the home !

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194 ashalanshu September 21, 2013 at 2:32 am

Dear Anant, how your wife is in NRI status? is she also on employment abraod or it’s just due to her living with you abraod? I want to go into details before answering any thing.

Thanks

Ashal

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195 Anant September 22, 2013 at 12:27 pm

She is employed abroad for over 14 years. I will be able to show that her salary earned abroad in total is adequate to buy the house. However, do IT dept. believe data from bank abroad? Also is that enough to prove that because I have remitted money in India in her account and visa-versa many times.

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196 ashalanshu September 24, 2013 at 11:47 am

Dear Anant, if you can prove later on for Income Tax people in India that you are giving the amount merely as a stop gap arrangement for your wife and later she is going to return you the money, there is no problem in it.

Thanks

Ashal

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197 SP.Gupta September 12, 2013 at 5:25 am

Excellent article. My son ,an NRI has purchased a house and rented it. The rent is being credited regularly by cash or transfer,to a joint a/c with my wife. This a/c was
opened when my son was studying long time ago. Does it cause any problem. Please
advise which is the best way to receive this rent. He uses this amount for some expenses/purchases in India. My wife is a house wife.

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198 Manish Chauhan September 17, 2013 at 7:45 pm

so on paper its coming as rental income to you guys , but expenses are done by son . Whats problem with this ? I think its a good way to plan taxes :)

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199 ashalanshu September 21, 2013 at 2:35 am

Dear SP. Gupta, the rental income is coming from house owned by your SON. the amount is also utilized by your SON. So there is no Tax liability on your wife. Relax.

Thanks

Ashal

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200 sajjad September 15, 2013 at 11:52 am

Thanks for providing details about gifts.
If sister (NRE) gives brother (for Home Loan) some amount (say Rs 10 Lakh) and later brother wishes to return the same amount. Will the amount still be considered as gift or any tax implication. Amount will be either online transfer to account or through cheques.

Thanks

Reply

201 Manish Chauhan September 17, 2013 at 7:04 pm

There will be on tax on the amount. Its a pure gift allowed between siblings !

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202 saurabh September 17, 2013 at 3:59 pm

Hi Manish,

This is a very helpful page for tax purposes. I have a query on the following situation.

1) I am helping my Father for a plot being purchased in his name (it’s a government ex-servicemen scheme and I am paying the entire amount) and it will be transferred to me after the necessary lock-in period required by the government.

2) My wife and I are contributing to this amount and she periodically transfers money into my account and subsequently I to my father’s.

Would be grateful if you could guide on the taxation scenario here.

Also, you talk about documentation. what is the best form of documentation for such periodic transfers?

Reply

203 Manish Chauhan September 17, 2013 at 6:38 pm

Saurabh

Trust me this is out of my knowledge scope . I mean a CA will have to be consulted here , because as per tax laws the land and house has to be on your name if you want to claim the taxation deduction, but for these kind of special cases, there might be something special which a CA will be able to point out :)

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204 ashalanshu September 21, 2013 at 2:28 am

Dear Saurabh, what is the lock in period? By documentation, it’s advised to keep records of gifting or loaning among relatives in the form of plain paper deeds if not on Stamp papers.

In my personal opinion, for the plot, you & your wife should enter into a legal agreement with your father that after the lock in period he ‘ll sell the plot to both of you only and he amount provided by you and your wife is part of that future sell of plot.

thanks

Ashal

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205 Pradip September 24, 2013 at 6:30 pm

My friend had purchased a land work of 65 lakhs. For which 50 lakhs cheque was paid by me from my nro account directly to the seller of the land.
My friend took GPA from the seller and thus sold off the property in to various plots.
While selling the plot he received cash from various small small buyers , this cash details are present in each of the sale deed the amount range from 200000 to 300000 under each sale deed.
With the above background, now my query is as I have shell out 50 lakhs and now he wants to return my fifty lakhs what will be the best way as he has collected cash from the sale of plot from various smal small buyers so that we will not loose our white money and at the same time it is permitted in the law.

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206 Manish Chauhan September 24, 2013 at 7:11 pm

The query is complex a bit. But if you have paid through cheque, it would be better if you also get money back through cheque , net banking, otherwise, it will be tough for you to establish the fact that this money is not your income .

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207 Pradip September 25, 2013 at 12:43 pm

as my friend received the amount in small amount of cash from various buyers. can he deposit cash in his account( such a huge cash) and then issue a cheque to me.( will it be a problem for him)

OR
He provides me with cash that he collected from various buyers on sale deed and i deposit that hefty amount cash in my account, would this be ok?
Kindly guide

Reply

208 Manish Chauhan September 25, 2013 at 1:45 pm

Pradip

I think you guys should consult a CA on this because this involves very large amount.

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209 ashalanshu September 26, 2013 at 2:52 am

Dear Pradip, as the amount is received in cash from various small buyers by your friend. Ask him to first deposit the amount in his own bank account. this ‘ll make his own books clean for the cash entries as per the sale deeds made for small buyers.

Once money is in his account, ask him to transfer the amount either through net transfer or cheque in your NRO account.

Thanks

Ashal

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210 Shyam Sunder September 26, 2013 at 3:49 pm

Hi,

I wanted to check if the money transferred by my wife to my father (my wife’s father-in-law) can be considered as gift.

Actually my wife had transferred an amount of Rs 10 lakhs to my father’s account, will this be considered as gift or not.

regards,

Shyam Sunder

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211 Manish Chauhan September 30, 2013 at 9:27 am

Its considered as GIFT only !

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212 Shyam Sunder September 30, 2013 at 9:57 am

Thanks Manish!

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213 Manish Chauhan October 7, 2013 at 8:47 am

Welcome

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214 ashalanshu October 2, 2013 at 3:16 am

Dear Shyam, NO. It ‘ll not attain Gift status automatically. Your wife should declare the same. Else it may remain a capital receipt only. To term it Gift or Loan ‘ll be the choice of your wife. In both cases, consent of her FIL is required to accept the amount. Documentation is also needed for each case.

Thanks

Ashal

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215 avinash September 27, 2013 at 9:05 am

Hi Manish very Nice and informative Article .
I have one Query,,,I have a friend who is Indian born US citizen,,He is Currently residing in India.
He is getting 1300 $ as social security benefit since 1981.
He has a FCNR and NRO account in india,,he want to gift me 1lac dollar from his FCNR account.
Is it possible for an US citizen to gift money to resident Indian?
Also I am not married ,,wht if i receive the gift on marriage,will i be taxed ?
Can u please guide me on this?

Thanks

Reply

216 avinash September 27, 2013 at 9:14 am

I Manish very nice and informative article.
I have one query regarding gift tax.
I have a friend who is Indian born US citizen..he is currently residing in India
He has a FCNR account and a NRO account in India.
He wants to gift me $ 1lac from his FCNR account.
Is it possible for US citizen to gift to resident Indian?..and how much is the tax to be paid.
Also i m not married yet,,can i receive the gift on marriage to avoid tax.
Can u please guide me on this?

Thanks

Reply

217 Manish Chauhan September 30, 2013 at 9:13 am

He cant gift you like this, there will be tax on that. Better take it on marriage.

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218 avinash September 30, 2013 at 5:33 pm

thanks for reply

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219 Peter B September 27, 2013 at 1:12 pm

Hi Manish,

Thanks for this.. very informative. 2 questions.

1. If I get a property from my uncle (father’s real brother) as a gift and give him 1 crore as a gift later I understand there is no tax liability on either of us. is this correct.

2. Can the gifted property be registered on me and my wife’s name, does that change anything?

Thanks …

Reply

220 Manish Chauhan September 30, 2013 at 9:06 am

I dont think UNCLE comes into the category where you can give unlimited gifts !

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221 ashalanshu October 2, 2013 at 3:19 am

Dear Peter, your Uncle can gift the property to you and your wife but in return, you can not gift anything to your uncle. The moment, you gift him, even 1 Rs. it’s taxable to him.

thanks

Ashal

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222 Peter B November 9, 2013 at 10:02 am

Can i gift to my Uncle’s (=father’s brother) son?

I have an account in india which i havent yet converted to NRO account, although i have remitteed close to 20 lakh in it. As a indian resident I may not be able to gift to my Uncle, as a NRI I understand i can gift my uncle any amount, can i use the money in my india account for that or does this amount have to be a direct remitance from abroad .. Also do i have to change my PAN card / PAN number to state that i am now a NRI?

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223 Manish Chauhan November 12, 2013 at 6:52 pm

I dont think that is valid. It will be counted as gift to any stranger only, so the 50k limit applies.

Manish

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224 ashalanshu November 19, 2013 at 12:42 am

Dear Peter, Cousin brother in above example is not the in the defined relative list, hence you can not gift tax free unlimited amount/kind to your cousin. The limit of 50K ‘ll aply in this case.

thanks

Ashal

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225 kamlesh pant September 28, 2013 at 5:20 pm

Sir,
My brother in law transferred Rs 150000 to my account in india from singapore in April 2013. As he is coming to india , Can Gift Deed for the same be executed in october ?

Regards
Kamlesh Pant

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226 Manish Chauhan September 29, 2013 at 9:19 am

What was the purpose for this ?

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227 ashalanshu October 2, 2013 at 3:21 am

Dear Kamlesh, yes, as at the time of money transaction, both of you were not available on same location to sign the gift deed (on a plain paper), you may now prepare the same, mentioing the old transaction to be treated as gift. now.

thanks

Ashal

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228 sowmya October 4, 2013 at 5:54 pm

My mother has a plot worth 72 lacks.
If she sells it then she can gift that money to me right? NO capital gain for me right?
But how much tax will she get?
If i invest all of it in FD in a bank will i have to pay tax on the interest of that amount?
The government value of it is suppose 30 lacks then how do i make rest of the amount legal white amount so i can put it in bank?

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229 Manish Chauhan October 7, 2013 at 7:52 am

First, when she sells the plot, she will have to pay the tax on the profits and what ever is left, she is free to do whatever she wants, she can give it to you and you will not have to pay tax on THAT MONEY, but when you use it for some investment or deposit it in bank , then whatever interest you get out of it, you will have to pay tax on that

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230 sowmya October 10, 2013 at 2:19 pm

thank u

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231 ashalanshu October 5, 2013 at 9:54 am

Dear Sowmya, first your mother needs to pay her Capital gain tax and only resulting amount can be gifted by her. Regarding black money, how can we help you? it’s advisable to register the sale deed on actual price not on govt. value. this ‘ll amke all white transaction and easy for your mother to do needful for her tax liability.

Yes interest earned by you from the gifted amount invested in FD is taxable.

thanks

Ashal

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232 sowmya October 10, 2013 at 2:21 pm

Thank u. Do u know what percent is the capital gain tax she will have to pay?
thank u in advance for advice

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233 ashalanshu October 10, 2013 at 3:39 pm

Dear Sowmya, the Capital gains tax rate on property sell is 20.6% for indexed gain. For more details on indexed capital gains, please research a bit.

Thanks

Ashal

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234 keyan October 8, 2013 at 6:08 pm

sir,
i am working in abroad and i have transferred from NRE account 15 lac to my wife bank account to aid in purchasing a plot in her name . I wish to know is this transaction would be considered as gift legally.
thanking you

Reply

235 ashalanshu October 9, 2013 at 3:05 pm

Dear Keyan, from taxation point as it was your money, in the purchased house your ownership is equal to 15L Rs. no matter the house is in wife’s name only. Even if you term it as gift to your wife, it’s not going to save you from that tax liability from the house income.

Thanks

Ashal

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236 Manish Chauhan October 18, 2013 at 11:11 pm

Yes, its a GIFT

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237 JAGJIT SINGH October 12, 2013 at 3:37 pm

dear manish
pls clarify on this
Gift Tax on Movable/ Immovable properties
if property is gifted with consideration, then it does not amount to gift. its a buy n sell transaction. how come this comes under gift.
“If the property is gifted for a consideration, then the actual value of the property will be taken”
if i consider ur statement as above, then is gift tax applies to property worth rs. 50,000 or above as well

regards

Reply

238 Manish Chauhan October 18, 2013 at 10:00 pm

HOw ? if I give my property worth Rs 40 lacs without taking anything to my son ? How will it attract gift tax ?

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239 ashalanshu October 13, 2013 at 2:15 am

Dear Jagjit, the Gift tax has been abloished in 1995 itself. So if a transaction is happening for a consideration, it’s a buy and sell transactions and it can not be termed as gift.

Thanks

Ashal

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240 shivania October 13, 2013 at 11:20 pm

Manish
My father wants to transfer 20lk in my account to purchase a property.
I know that the amount transferred will be considered as the gift on which neither me nor my father will have to pay the tax and a gift deal is to be prepared for the safe side to face the future questions of IT dept.
Only clarification i wants from you is the mode of gifting the amount in my account, i.e., by cheque or cash (my father can,t perform internet banking).

Reply

241 Manish Chauhan October 18, 2013 at 9:48 pm

It should be cheque, because only then you can prove that your father gave you , Other wise IT dept can say you got CASH from somewhere else ! . So use Cheque only ! . Or your father can go to his branch and initiate a offline NEFT/RTGS from his account

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242 ashalanshu October 15, 2013 at 9:46 am

Dear Shivania, please use Cheque if your father can not perform netbanking. Interestingly, your father can also use RTGS at his branch to transfer the amount instantly to your account for a nominal fee.

Thanks

Ashal

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243 Ram October 22, 2013 at 11:51 am

Hi Manish,
Thank you for this article and it is really very helpful. I have one query.
My friend is in need of Rs 10L and i am planning to give him money by taking personal loan and going to collect interest which i am going to pay for personal loan. In this case i have not got any profit. Will there be any tax for interest collected from my friend.

Thanks
Ramprasad

Reply

244 Manish Chauhan October 26, 2013 at 10:31 am

You will have to pay the interest part for sure and you should recover that also . Plus , the impact of this will be on your credit report, thats one main point you should remember. A lot of companies do not like to lend those who are high on unsecured loan . This might impact your personal credit score , so just be careful !

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245 Prashant Jain October 27, 2013 at 5:44 pm

if i gift my house to my elder brother’s son which cost almost 35 lacs, what is our tax liability & which process i have to follow

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246 ashalanshu October 29, 2013 at 8:02 am

Dear Prashant, you can gift the house to your nephew. As the gift is a real estate property, you w’d have to reregister it in your nephew’s name to make him owner and to complete the Gift. You should also write down a gift deed for this effect on a plain paper. Both should sign on it.

No tax liability on you or on your nephew as of now. Later on as wnd when the said house property is sold by your nephew, the capital gain on the property ‘ll be taxable in the name of nephew.

Thanks

Ashal

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247 Manish Chauhan November 4, 2013 at 11:44 am

You have to pay tax as usual like you would have paid if you sell it to me :) . NOthing special if you sell it to your brother’s son !

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248 Mayur November 7, 2013 at 11:25 pm

If a grandfather gifts some cash to his grand son (minor), now what will be tax impact on this?

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249 Manish Chauhan November 12, 2013 at 8:23 pm

No tax impact . that money is now grandsons;s

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250 ashalanshu November 19, 2013 at 12:45 am

Dear Mayur, a small addition to dear Manish’s reply. the gifted amount is not Grandson’s capital but any taxable income generated from it ‘ll be treated as taxable income of father or mother of the grandson (whoever is earning more) and S/he w’d have to pay tax on it.

Thanks

Ashal

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251 Sudershan November 11, 2013 at 12:17 pm

Dear Manish,
Thanks for such a nice article in such simple language. I had been skipping tax planning and investments and paying tax on interest on savings account (More than Rs 10,000 per year). Couple of months ago my friend informed me about PPF for family, each member can invest upto 1,00,000 per year. Can I transfer 15k per month (annual 1,80,000) to my wife (Housewife) and 15k per month (annual 1,80,000) to son (11 years, student) who in turn invest 1,00,000 in PPF and remaining in Savings A/c or FD in the bank. Will the interest generated from PPF or from Savings ac or FD will be added in my income?
Thanks in advance
Sudershan

Reply

252 Manish Chauhan November 12, 2013 at 5:45 pm

Your friend has taken it very lightly . You cant just transfer money to your wife and minor son and they can invest the money and take tax benefit . May be in short term you might be able to save some money , but over a long term if there is a scutiny, you will get in problem . Any ways you cant tell tax department that you want exemption on your PPF , your wife PPF and son PPF . Its not allowed. Not sure if your friend is referring to HUF ? Read more about HUF here – http://www.jagoinvestor.com/2011/10/huf-creation-and-saving-tax.html

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253 Sudershan November 12, 2013 at 7:05 pm

Dear Manish, Thanks for your quick reply. Its not about HUF. I want to add here is that, its only about saving Tax on interest on savings account without compromising on liquidity. And to add here that I opened ppf account in IDBI after visiting their office and taking their advice which was that I can invest Rs 1 Lakh in my son’s name apart from 1 Lakh in my name. Because this account is under my guardianship, all detail is available together. And I invested 1 lakh each in both ppf. If it is illegal to invest more than a lakh how can I get that money back to avoid complications? Also I want to buy your books, where to get them. I am based in Chakan and postages get lost here so I prefer buying from stores.
Thanks in advance.

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254 Manish Chauhan November 12, 2013 at 7:49 pm

You can invest in both accounts if you are not looking at tax benefits :) .

Regarding my books . you can get them on crossword stores and also from online stores. I suggest you opt for COD (cash on delivery option) , so that you pay CASH when you get them in your hand :) . You can click on the links on this page and buy all books from flipkart – http://www.jagoinvestor.com/book

Manish

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255 Pankaj November 11, 2013 at 1:19 pm

Say I would like to gift Rs 200000 to my father and mother each. They will make FD for this amount. So my questions is, do they need to pay tax on received amount. Also FD interest will club to my income or that will be their own income and shown in there ITR? Do I need any paper work say gift deed etc?

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256 Manish Chauhan November 12, 2013 at 5:43 pm

The money once gifted to them will then become their money . The interest will be their income , and they have to pay the tax. There is no documentation required if the transaction can be clearly established like a bank statement or something .

Manish

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257 Bob November 11, 2013 at 2:35 pm

Hi Manish,

2 weeks back my father gifted me 10L rupees (via chq).
But I put it in FD (via chq) in my wife’s name who is a housewife.
What will happen to the interest earned from the FD? Will it be added to my taxable income?

Bob

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258 Manish Chauhan November 12, 2013 at 5:42 pm

If it was given to you , its your money then . Now whatever is done with that money , its considered to be your money . The interest will be added to your income !

Manish

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259 Bob November 13, 2013 at 10:21 am

Thanks Manish. What if, instead of opening a FD in her name, I gift her the same amount? Will the interest be added to my income?

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260 ashalanshu November 19, 2013 at 12:48 am

Dear BOB, mponey is still your’s as section 64 clubbing provisions count income from gifting among spouses as the income of original owner.

Thanks

Ashal

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261 Ncen November 18, 2013 at 11:27 am

1) Can I give a wedding gift a month early? This would be about 50 lakhs. I know that the law does not mention any time.

2)In this above case, do I still need to do a gift deed? If i am nri, can I give a gift now and do the gift deed two months later?

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262 ashalanshu November 19, 2013 at 12:51 am

Dear Ncen, you can very much gift the amount just before the marriage as part of marriage gift but interestingly, before marriage, the w’d be spouse is not your spouse and hence for him/her, this 50L Rs. money ‘ll be treated as income and S/he w’d have to pay a lot of tax on it. should I dsay more?

What benefit you are going to achieve from making deed after 2 months of actual gifting?

thanks

ashal

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263 Ncen November 19, 2013 at 7:43 am

Thank you Ashal for your response.
I think I was not clear in my question. To detail it out: Q # 1 Because of the need of money for the wedding couple, I was trying to give the gift (money 50 lkhs)a month prior to marriage which is suppose to be on occasion of marriage. (Occasion is the same, but instead of giving it a day prior to wedding, I am giving it a month prior.)And I am not gifting to my spouse, but to my friend who is getting married.

Q # 2 was whether the gift deed is compulsory and if so, can it be done two month later from now when I come to India as I am based abroad for the moment. While in India, I can meet with the lawyer and get it done.

Or new Q#3: Can I give it as loan without interest which my friend is ready to return back in a year. Does the loan or borrowed money accounted in the tax filling.

Hope this will throw more light on my above question.

Thank you in advance for all your help.

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264 ashalanshu November 19, 2013 at 8:42 pm

Dear Ncen, based upon the added info, I w’d prefer to use zero interest loan route for the set up. No need of an advocate. Simply give the money through bank transfer to your friend. When you are in India, sign the loan agreement and receive the amount in next 1 year through banking channel as usual.

Thanks

Ashal

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265 deepakdelhi November 25, 2013 at 1:20 pm

Dear Manish,

HIghly informative article.. kudos.

i hv purchased a car.. ( in my name) entirely in cash. Rs. 7,80,000/-.. contribution was made by my brother, father and mother. They did not transfer the money to my account, rather they withdrew cash to give me. I am supposed to intimate this purchase to my employer. Initially i treated this contribution as ‘interest-free loan’. can now this be converted as gift from my family members?

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266 ashalanshu November 26, 2013 at 1:00 pm

Dear Deepak, was any loan agreement prepared by you? Why did you accpeted as Cash? Can you prove the actual cash withdrawals from the respective bank accounts of the people you are mentioing?

Please do remember, Cash Transactions are always look upon with a suspected view by Income Tax authorities.

Thanks

Ashal

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267 deepakdelhi November 25, 2013 at 2:34 pm

in addition to my previous query, can employer ( Govt deptt) ask for account statements of persons who have given you gifts in cash in purchase of one’s car.. purportedly to show that money has been withdrawn from their account ?

pls advice.

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268 ashalanshu November 26, 2013 at 1:02 pm

Dear Deepak, either your employer or Income Tax people later on may ask you to prove that money was actually withdrawan from the respective accounts. More than that, the people in question have enough resources to give that much money as Gift/loan to you.

Some how I feel you are inviting a lot of trouble to yourself. Only you can answer honestly from where did this cash amount come into the picture. Are you understanding what I mean?

Thanks

Ashal

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269 deepakdelhi November 26, 2013 at 3:36 pm

thanks Ashal..

my mother is Govt employee, father pensioner, brother employed with reputed private Organization.. Yes, loan/gift given by all three is well within their annual salary.. at the time of purchase, didn’t think cash purchase would be problem.. as the cash given by all of them is their savings..

2ndly didn’t prepare any loan docs.. again the same question, can this interest free loan (administration person/dealing hand if u will, suggested that their contribution be shown as interest free loan, so i complied and gave affidavit as desired) be converted into gift in some future date? somewhere in this thread itseld, i read that even if interest-free loan is not repaid, its not much of a problem as it can be treated as gift..? one more related question : interest free loan is tax-free? right?

thing with Txn is that, not all the cash has been withdrawn at the time of purchase.. some even 10 months earlier.. now would that be a problem?

obviously this has been all because of ignorance.. else i would have structured in a different manner… or even taken a loan..

now, how this situation can be corrected? forgive my naivete, i don’t think i m sure what even needs correction..

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270 ashalanshu December 5, 2013 at 1:49 pm

dear Deepak, can we discuss your personal issue over personal mail ID?

Thanks

Ashal

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271 deepak December 6, 2013 at 10:08 am

sure brother..

my id is – deepakchaudhary01@gmail.com

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272 Deb November 25, 2013 at 6:21 pm

It’s really a nice and informative article meant for all section of people in our society.
Keep it up….

I have a query….

I sold a house and got 40 lakh. I want to give it as gift to my mother(senior citizen) as she can use the monthly interest income for her expenses as she has no other source of income.
1. The interest income would be added to my income or to her annual income ?
2. It would be better to gift her or should I go for loan to her?

Please advice….

Thanks.

Reply

273 ashalanshu November 26, 2013 at 1:04 pm

Dear Deb, you should gift it to her. Once you gift it, it’s her income and she w’d need to pay tax if any on it. Your Tax liability is only on the LTCG amount for your house sell out.

thanks

ashal

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274 Sudesh Vij November 30, 2013 at 8:47 pm

I like your suggestion & guidance pl.

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275 Sudesh Vij November 30, 2013 at 8:55 pm

can a husband gift upto Rs 5o thousand in a financial year to his wife through cheque on her birthday.

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276 ashalanshu December 2, 2013 at 4:31 pm

Dear Sudesh, not only 50K, you are free to gift any amount more than this. problem starts when the wife is earning some taxable income from this gifted amount. No matter gift is exclusively on birthday or any other day, the income should not be taxable at all. that’s the key here. So the wife should invest either in PPF or in tax free bonds or in Eq. MFs.

thanks

Ashal

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277 Manish Chauhan December 12, 2013 at 4:15 pm

Yes .

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278 Faizan December 4, 2013 at 6:29 pm

Dear Manish,
A brother wants to gift (by way of cash/cheque) a sum of Rs. X lacs to his brother. My query is :
1. What should be the preferred mode of transfer – cash or cheque
2. Whether stamp duty is payable on such a gift?
3. How should the gift deed be executed
4. The brother receiving the money would invest the same and earn income. Such income will be taxable in the hands of the donee or donor?

Appreciate your reply. Thankyou

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279 ashalanshu December 5, 2013 at 1:51 pm

Dear Faizan, please use cheque or netbanking for the transaction. No stamp duty is there. Gift deed can be executed on a plain paper. the income ‘ll be taxable in the name of the donee.

Thanks

Ashal

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280 Manish Chauhan December 12, 2013 at 3:14 pm

1. It should be paid through cheque so that there is proof for this
2. No
3. NA
4. For the person who is giving it , its anyways from after tax amount ! . So no double taxation for giver, but for taker also , there will be no tax at the time of recieving it

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281 Pallavi Alhat December 8, 2013 at 1:29 pm

Dear Manish,

My parents have sold our residential property and they will pay me Rs.50,00,000/- to buy my own house from a capital gain.

I would like to know what will be the tax liability for them and for me as well?

I will be buying a new house property on my name so will that be consider a gift from my parents?

Hope to hear from you soon.

Reply

282 Manish Chauhan December 12, 2013 at 2:32 pm

I suggest that you consult a good CA on this . This is not so simple .. A little mistake might mean lot of taxation .

Manish

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283 ashalanshu December 9, 2013 at 12:35 am

Dear Pallavi, before gifting the money to you, your parents need to complete their tax liability on the LTCG arising out of the sell of property. Post their Tax liability, they are free to gift 50L Rs. to you to help you puyrchase the house. There ‘ll be no tax libaility on your for the gifted amount.

Thanks

Ashal

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284 Vijay December 9, 2013 at 2:18 pm

Hi Manish,

Thanks for this informative article. I have one querry. My Father-in-law wishes to gift me a car [to be registered in my name]. Payment is being made to the Car Dealer through RTGS by my FIL. I assume that keeping a white paper deed, showing the car as a gift will be sufficient (for tax exemption). But do I have to file any IT returns for this transaction.

Thanks in advance.
Vijay

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285 ashalanshu December 11, 2013 at 10:53 pm

Dear Vijay, from income taxation point, please prepare a Gift deed and ask your FIL to trandfer the amount to your bank account. From there you should pay the Car dealer to keep the matter simple. The gifted amount from your FIL is to be reported in your ITR as exempted income.

Thanks

Ashal

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286 VJ December 9, 2013 at 2:29 pm

Hi Manish,

Thanks for this informative article. I have one querry. My Father-in-law wishes to gift me a car [to be registered in my name]. Payment is being made to the Car Dealer through RTGS by my FIL. I assume that keeping a white paper deed, showing the car as a gift will be sufficient (for tax exemption). But do I have to file any IT returns for this transaction.

Thanks in advance.
Vijay

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287 ashalanshu December 11, 2013 at 10:57 pm

Dear Vijay, please read the above reply.

thanks

Ashal

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288 Manish Chauhan December 12, 2013 at 2:05 pm

Yea a paper saying that will be enough . you dont need to put this in returns !

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289 P Gupta February 21, 2014 at 9:09 pm

Just a query. In this case, does the receiver need to add this in his income tax return (as exempted income)? The responses (numbers 282 & 285) are confusing.

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290 praful December 17, 2013 at 12:18 am

dear manishji

kya apne sage chacha ke ladke [bhai] se prapt gift per tax hai ya tax free hai

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291 Manish Chauhan December 18, 2013 at 3:44 pm

It will be considered as normal gift and hence gift tax will be applicable

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292 ashalanshu December 23, 2013 at 1:36 am

Dear Praful, the amount received from your cousin brother ‘ll be taxable as if you are receiving the money from a non relative. So if the amount is less than 50K, no tax but the moment it crosses the 50K limit, all the amount is taxable.

Thanks

Ashal

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293 rahul talreja December 21, 2013 at 2:55 pm

dear sir

i collected amount of 86,000 to repay loan of my friend.
please let me know if it will be tax free or not ( what to do)
i collected amount from 20-25 friends in my savings bank account.
{ Loan is yet to be paid }

Reply

294 ashalanshu December 23, 2013 at 1:40 am

Dear Rahul, why did your friend not collected or your other friends not give directly? For the given situation, this 86000 Rs. is your taxable income if you treat it as gift. If you treat it as loan, no tax liability.

Thanks

Ashal

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295 Manish Chauhan December 25, 2013 at 10:14 am

You dont need to pay TAX on that

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296 praful December 25, 2013 at 11:37 pm

mai aur mere cousin brother ne milker 1 flat liya tha .
pichle sal wah cousine brother ne wah muze gift diya.
maine taxfree samzker tax adda nahi kiya aur mere balance sheet me gift from brother head me capital ko credit ker diya .
gift flat share value of rs. 13 lacs [last year] but at the time of purchase total value of flat of rs. 9 lacs
krupaya muze kya kerna chahiye salah de.

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297 Manish Chauhan December 28, 2013 at 4:27 pm

You should have paid the Tax on the amount you got . Did he gift it to you on some occasion like your wedding or something . I suggest you take advice from a good CA

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298 ashalanshu December 27, 2013 at 9:55 pm

Dear Praful, as the gifted amount (valuation of property) was more than 50K Rs. it’s your taxable income in the year of receipt. Please contact a CA/Tax professional to handle your case for late payment of due taxes with penalty.
Alternatively, please purchase the flat from your cousing brother to keep the matter simple at your end.

Thanks

Ashal

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299 shaheen January 4, 2014 at 12:36 am

money transferred to a blood relative will not be taxable to the relative but will it be still taxable to the donor? in other words suppose i earn 9 lacs p.a. and transfer 3 lacs to my mother aged 69. my mother will not be taxed on this 3 lacs but will i be liable to pay income tax on 9 lacs or the remaining 6 lacs ?

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300 Manish Chauhan January 4, 2014 at 10:44 am

The money “Donated” is that money which is left after paying the tax. So Gift is given out of “post-tax” wealth and not “pre-tax” wealth !

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301 shiva January 11, 2014 at 11:31 pm

Dear Manish

I am living abroad and planning to buy a house in india
Would like to know if i can take some money from my fiancie
Who is an non Indian. Approx 15 lakhs

Cheers
Shiva

Reply

302 ashalanshu January 12, 2014 at 11:46 pm

Dear Shiva, I assume the transaction of 15L Rs. ‘ll first happen in the country of your residence from her account to your account and then only you ‘ll transfer the same to India. In this case, you may treat this amount as interest free loan, which you should return later on as per your cashflow position. If it’s considered as loan, you need not to worry for taxation thing on it.

Thanks

Ashal

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303 Manish Chauhan January 14, 2014 at 12:32 pm

depends on the law of your current country, how does it see the bank transfer from your spouse on invesmtents to be done out side their country .Its not as simple as it sounds !

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304 Lalit January 13, 2014 at 7:04 pm

Dear Manish,

My son is working and not a dependent. If he gifts any amount more than Rs. 50000 and similarly if I gift more than Rs. 50000 to my son what will be tax implications ?
What are the documents to be made and be kept as records?
Pls advise ?

Regards

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305 ashalanshu January 14, 2014 at 2:23 am

Dear Lalit, you can gift to your son and vice versa. You should prepare a gift deed on a plain paper. Signed by both of you. Whoever is donee (gift receiver) should write – I accept the gift with his sign.

Thanks

Ashal

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306 Manish Chauhan January 14, 2014 at 12:06 pm

Nothing . The receiver does not have to pay any tax on the gift received from parent or son !

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307 shekhar January 14, 2014 at 12:08 pm

Hi,

I recently got married and received around 80k as gift. How do I show this income. Specifically which section of Income tax I should declare this income. This cannot be a part of other sources as limit there is 50k. Please guide me.

Thnx,
Shekhar

Reply

308 ashalanshu January 14, 2014 at 11:55 pm

Dear Shekhar, the gifts received at the time of marriage from non relatives in excess of combined limit of 50000 Rs. are tax free. If you want to report the same in your ITR, please declare the gifted amount as exempted income.

Thanks

Ashal

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309 Anil January 24, 2014 at 8:48 pm

Hi….
This is a very good article having valuable information. Thanks for spending your valuable time.
I have a query.
If I have gifted an amount of Rs. 1,00,000 to my mother. While filing ITR in which section I need to show this amount?
May be you already replied this query but I am unable to locate?
Please clarify? Thanks in advance.

Regards,
Anil.

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310 ashalanshu January 25, 2014 at 9:17 pm

Dear Anil, as you are gifting to your mother, you need not to report this amount. Yes in case your mother is also filing her ITR, she should report the same into expempted income.

Thanks

Ashal

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311 Anil January 25, 2014 at 9:55 pm

Dear Ashal,
Thanks for your reply.
Actually my query is, I am gifting the money to my mother from my salary income. As my employer is already deducting TDS from my salary. Can I file this gift amount in my ITR and can take refund from the income tax dept? If so in which section I need to show in the ITR?

Thanks,
Anil.

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312 ashalanshu January 25, 2014 at 10:00 pm

Dear Anil, Sorry to say but you can not claim any tax benefit from such gifting to your mother. :)

Thanks

Ashal

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313 Manish Chauhan January 30, 2014 at 6:43 pm

You dont have to do anything on this . This amount is anyways after tax income !

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314 niraj January 24, 2014 at 9:36 pm

Dear Manish
My father in law wants to gift my wife some amount of money can he
give crossed demand draft/demand draft from his account instead of cheque? he will
also make some paper work so it is valid or not?

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315 ashalanshu January 25, 2014 at 9:18 pm

Dear Niraj, yes demand draft from your FIL to your wife and supported by a Gift deed ‘ll be a valid gift transaction.

Thanks

Ashal

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316 Manish Chauhan January 30, 2014 at 6:32 pm

He can do that without any paper work. If things are done thorugh demard draft, anyways things are in black and white, so no worries

Manish

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317 Shahnawaz Ashraf January 26, 2014 at 8:06 pm

If i give rs 50000 to my wife as a loan then can i save tax on these rs 50000 or not.

Many Thanks

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318 ashalanshu January 27, 2014 at 7:59 pm

Dear Shahnawaz, no. You can not save tax due to gifting or loaning to your wife.

Thanks

Ashal

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319 Manish Chauhan January 30, 2014 at 6:21 pm

No you cant . One can never save tax by giving. Only the reciever does not have to pay tax !

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320 Santosh Rao January 27, 2014 at 4:12 pm

hi,
If i gift my wife Rs2 Lac in a financial year and she invests 50K in PPF and spends the rest of them for house hold purchases in the financial year. Can i claim tax exemption on my income for this 1 lac, if i am reading this article correctly?

Thanks,
Santosh Rao

Reply

321 ashalanshu January 27, 2014 at 8:01 pm

Dear Santosh, on which 1L Rs. you are claiming Tax benefit? You can not claim any tax benefit on the gifted 2L Rs. Yes if you invest 50K directly into your wife’s PPF account it’ll be counted as investment within the over all limit of 1L Rs. under section 80C.

Thanks

Ashal

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322 Santosh Rao January 27, 2014 at 9:16 pm

Hi Ashal,
Thanks for the quick reply. It was typo. I wanted to ask if I can claim tax exemption on the 2L gifted. As you are stating that I cannot. So the only benefit in this case would be tax free interest that is gained out of 50k invested in PPF a/c of my wife. Pls confirm if this understanding is correct.

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323 ashalanshu January 27, 2014 at 9:17 pm

Dear Santosh, yes your understanding is correct now. :)

Thanks

Ashal

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324 Santosh Rao January 27, 2014 at 9:22 pm

Thank you. I was reading a article in economic times .com and found that it was misleading. Hence wanted to get my understanding right. Thanks again.

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325 Stev January 29, 2014 at 9:34 am

Even I read this article in Economic times
http://economictimes.indiatimes.com/slideshows/investments-markets/7-ways-your-family-can-help-you-save-taxes/invest-through-your-spouse/slideshow/29292903.cms

I was wondering whether I can claim over 1 lac 80C limit by giving cash gift to my wife. I feel the article in economic times is highly misleading.

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326 Manish Chauhan January 30, 2014 at 5:10 pm

That way you can only save tax on that amount you gifted in future because interest income arising out of it will be taxable in wife hand , not yours !

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327 raman dev January 30, 2014 at 11:31 am

sir
My father in law is gifting rs 1.5 l to her daughter. The money is on non returnable basis. I believe this does not add to her income for taxation purposes. For this I belive that my wife and her father need to sign some kind of agreement. Can you please tell me from where can I get the language of the agreement, either provide me a link or it will be great if you can attach the matter. Does she have to pay income tax on the interest earned by her?

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328 Manish Chauhan January 30, 2014 at 4:12 pm

Raman

She will not be paying any tax . No need to make any document . Just be ok with it :)

Manish

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329 ashalanshu January 31, 2014 at 4:42 pm

Dear Raman, I think you are asking for gift deed sample. Please contact me over my personal mail id to get the sample deed.

Thanks

Ashal

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330 Abhijeet January 30, 2014 at 7:12 pm

Dear Manish,

Can my Father-in-Law give me Rs. 10 Lacs for foreclosing my home loan account? Or he will give this amount to her daughter(my wife) first who will then transfer/gift the money to me? Will this amount be tax free for me? Kindly guide.

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331 Manish Chauhan January 30, 2014 at 7:29 pm

Yes, this amount will be tax free for you , but I am not sure if home loan company will be fine with it or not . As per their rules, it has to be your own earned money if you want to prepay . I think it would be a good idea to ask them once . Note that you can still prepay with that money but in worst case there may be prepayment penalty of 1-2%

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332 Abhijeet January 31, 2014 at 12:50 am

Thanks a lot Manish for timely guidance. Appreciate your efforts.

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333 ashalanshu January 31, 2014 at 4:39 pm

Dear Abhijet, what ‘ll you say, If I tell to adopt following way.

1. your FIL, gift the amount to your Wife (his Daughter).
2. Your wife and you prepare a loan agreement for home loan transfer from bank.
3. Wife transfers money to your bank account.
4. You prepay and forclose your home loan with bank.
5. Now you are paying interest yly to your wife and claiming income tax benefit of home loan on the same.

Are you ready for it? If yes, please Nike (just do it). if not, please tell me your pain points.

Thanks

Ashal

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334 Abhijeet January 31, 2014 at 6:03 pm

1. Isn’t it necessary that when you transfer the home loan, it has to be a bank only? i.e. Home loan to be transferred from bank to where?
2. Is it permissible?
3. How will I pay Interest and Principal to my spouse?
4. What will be the relevant document for submitting to IT office while asking for rebates on both principal and interest like the Provisional Certificate we get from banks?

Reply

335 Manish Chauhan February 1, 2014 at 6:24 pm

Hi abhijit , I didnt get the context you are talking about , where in this article are we talking about transfer of loan ?

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336 Abhijeet February 1, 2014 at 9:36 pm

Hi Manish,

It was as per comments provided by Ashal.

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337 ashalanshu February 1, 2014 at 10:17 am

Dear Abhijeet, here are answers for your counter queries.

1. Even non bank i.e. private source funded home loan is allowed but principal repayment for a home loan to a private source is not allowed. Only interest benefit is allowed.

2. Yes it’s allowed.

3. You should pay only interest and pay principal only at the time of retirement so that you can shift a part of your retirement corpus officially to your wife.

4. You need to prepare home loan agreement between your wife ans lender and you as borrower. Also keep interest certificate issued by your wife every year ready with you. This is to be produced only in case of clarification demanded by Income Tax officials.

Thanks

Ashal

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338 Rajkumar February 4, 2014 at 12:42 pm

Hi Abhijeet,

A relative of myself has been in long disputes and I recently settled matter by cash and check payment. I gave them letter stating payment was a gift but actually it was not a gift but a payment to end the dispute. Does my relative need to file this in their income tax or will the gift letter be sufficient.

After the matter was solved, a few weeks later my uncle is still arguing and I now want to retract my gift letter to them.

Thanking you kindly,
RKP

Reply

339 ashalanshu February 4, 2014 at 1:21 pm

Dear Rajkumar, can you elaborate your query? I’m unable to understand.

Thanks

Ashal

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340 Vinodmusic February 5, 2014 at 3:25 pm

Dear All,

Very nice and informative thread. Thanks for all the information.

I have a query and need your help and advice.

I am an NRI from past 8 months.

I have transfered nearly about 13.8 lakhs in my indian local account (remember not an NRI account) in this 8 months.
This money then I transfered to my father in law account (every month say 1 lakh, 1.5 lakh and so on) via cheques and internet transaction.
which he in form of cheques in his name gave to the owner of the plot which we plan to buy in my Dad’s name.

Can we show this as gift amount and get exemption from paying tax.
Or do we have to declare this amount on tax form.

Please advice what all documentation do we require.

Regards.

Reply

341 ashalanshu February 5, 2014 at 8:45 pm

Dear Vinod, the amount paid by you to your FIL can be termed as gifting but the amount paid by your FIL from such gifting for plot under your Dad’s name ‘ll invite trouble from income tax for your dad as your FIL’s payment to your Dad ‘ll be counted as taxable gift.

Thanks

Ashal

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342 Manish Chauhan February 14, 2014 at 6:23 pm

First point is that your indian bank accounts will be treated as NRO account after you have become NRI . Your transactions are very complicated and I suggest you take help from a good CA on this .

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343 Vinodmusic February 6, 2014 at 6:00 am

Dear Ashal,

Thank you very much for your reply.

So what can be done know.
Should I register the land in my name or in my FIL name.

And What can be done if I have to register land on my dad’s name.

Regards,
Vinod

Reply

344 ashalanshu February 6, 2014 at 8:56 pm

Dear Vinod, instead of transferring money to your FIL, transfer the money to your father’s account and then pay from his account to the seller and get the property registered under your farher’s name. As simple as that.

Thanks

Ashal

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345 Joby February 8, 2014 at 3:02 am

Sir ,

If I (NRI ) gift 25lakhs( From NRO/NRE account ) to a friend ( Non NRI- Indian ) of mine, what will be the questions asked to me and will I have any further liability to Tax departments ? What will be the tax implications on him ?

Regards
Joby

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346 Manish Chauhan February 14, 2014 at 5:34 pm

This 25 lacs is your AFTER TAX INCOME, so you dont need to pay any other tax apart from what you have paid , now your friend might get into the taxation angle considering this is a GIFT . However be ready to answer the questions on how this 25 lacs came to you incae !

Reply

347 ashalanshu February 9, 2014 at 4:44 am

Dear Joby, no question ‘ll be asked to you directly. The amount transferred to your friend ‘ll be his taxable income and he needs to pay tax on it. In case Income Tax people dig deep in to your friend’s account, the trail of money may leads to you and at that time you should be able to justify the source of funding as per your own income statement.

Thanks

Ashal

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348 Yogesh February 18, 2014 at 6:38 pm

Dear Manish

I have a query.

I heard somewhere if i transfer some money to my wife’s account say 1 or 2 lacs, then i can save my tax under some rule.

Is it correct, how much i can transfer and take advantage in tax rebate.

Reply

349 ashalanshu February 20, 2014 at 9:09 am

Dear Yogesh, the information is incorrect. You can not save your own tax liability by transferring your money to your wife’s account.

Thanks

Ashal

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350 Manish Chauhan February 21, 2014 at 10:51 am

No , you cant .. all the money from gift someone is considered from your taxed income, not before tax !

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351 Manish Jandera February 21, 2014 at 10:47 pm

My father in law want to gift me Rs. 20, 00, 000/- for purchase of property in Mumbai. what will be the income tax liability for me on this amount. what documentation should be done for this transaction for evidence.

Reply

352 ashalanshu February 22, 2014 at 4:33 pm

Dear Manish, please prepare a gift deed. As it ‘ll be a gift from a Father in law to his Son in law, this ‘ll be tax free to you.

In my personal opinion, I w’d like that your FIL gifts this amount to your wife and she give it to you as loan and you pay interest on this home loan to your own wife and claim tax benefit on the same.

Thanks

Ashal

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353 Manish Chauhan March 3, 2014 at 11:57 am

No income tax on this , because father is law can gift son in law money for this cause

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354 Sandeep February 23, 2014 at 5:32 am

Hi, Thanks for the informative thread. I want to ask a question which may not be completely related to the thread but thought you guys don’t mind answering it here!

I am an NRI planning to buy a property in India and rent it out.

1. Do I have to open NRE account or NRO account to send money to India? Infact can you please explain difference b/w NRE and NRO accounts as I do not find good answer any where?
2. The money used to buy is already taxed in the country of residence. Now correct me if I am wrong. I just pay the registration cost to Indian govt. ryt? and not any tax on the money I used to buy to Indian govt.
3. The rental money generated from the property will be taxed in india or the country of residance?
4. If I plan to take partial loan from Indian banks what would be the situation? Will there be any tax complications arising for me in India. I do not have any income generated until now.

Thanks in advance!!

Sandeep

Reply

355 Manish Chauhan March 3, 2014 at 11:55 am

Sandeep

1. Read this one – http://www.jagoinvestor.com/2010/06/short-nris-guide-to-banking-insurance-investments.html

2. I am not 100% sure on this – ask here – http://www.jagoinvestor.com/forum

3. In India, because its Indian income

4. It would be bank choice if they want to give loan to you in this situation or not . Contact few bank agents on this .

Reply

356 ashalanshu February 24, 2014 at 2:49 am

Dear Sandeep, before I comment on the account issue, please do note few countries like USA tax your global income. So your rental income is taxable in India as well as USA. Now as you ‘ll be paying Tax in India, same ‘ll be available toset of from your US bound tax liability on this Indian rental income under the Indo-US DTAA but still you ‘ll be increasing your tax liability in US.

So before jumping in, please consult with your tax planner in your current country of residence about this double taxation issue.

Thanks

Ashal

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357 Rakesh Kumar February 25, 2014 at 1:53 pm

I have received some money during my marriage as gifts from my parents. My wife’s salary is less than mine, so i transferred the same into her A/c.
1. Can i show this as gift of marriage to her
2. How and where do i show in the ITR form about the gift recieved / given, Loan given etc
Thanks,
Rakesh

Reply

358 ashalanshu February 25, 2014 at 10:35 pm

Dear Rakesh, how much time has been passed now to your marriage? Gift if received from defined blood relatives is tax free hence you can show as exempted income in ITR. Gift from non relatives in excess of combined limit of 50000 Rs. in a year are taxable. Please show this gift amount as income from other sources.

Thanks

Ashal

Reply

359 Rakesh Kumar February 26, 2014 at 11:18 am

Hi Ashal,

Thanks, Actually the money transfer happened over a period of 6-8 months after marriage, will this create problem?
Also i checked the ITR2, it has a EI tab which is about Shecdule EI(Exempt Income), which has a row for Others, do you mean we need to show the Gift Amount in this row (as it is an exempt income)
Thanks,
Rakesh

Reply

360 Manish Chauhan March 3, 2014 at 10:18 am

1. Yes

2. YOu dont have to

Reply

361 ashalanshu February 26, 2014 at 11:11 pm

Dear Rakesh, yes you need to quote the gift amount as EI in the schedule you are referring to.

Thanks

Ashal

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362 Biswarup February 27, 2014 at 5:24 am

Hi Manish,

This is an excellent article you have put up here. And most importantly its allowing us to understand the Taxation system of our own.

I have an open question which I was wondering if you can help me with.

I work overseas and I have sent over money to My Friend in India to help him with his business. The Money I have sent over is after TAX of the country I am residing. And I have sent it through xoom money transfer channel (www.xoom.com) to friend’s ICICI account. So from that perspective its clear to me that I don’t have to pay any TAX.

But now is the time for my Friend to return the money he borrowed from me and I don’t have any NRI account at this moment. All I have is a savings ICICI account. Now when he returns My Money, will that be subject of TAX. What is the best way for him to transfer this amount to me?

Any inputs will be really appreciated.

Thanks,
Biswarup

Reply

363 Manish Chauhan March 2, 2014 at 7:04 pm

Actually if its just give and take case, then you dont need to worry , but yes it might just catch someone eye if the money amount if quite big , so you should be ready with documents to prove it . thats all you need to worry about . Yoy dont need to pay tax on it agian !

Reply

364 mad February 27, 2014 at 10:39 pm

If i give some amt. to my daughter as gift with an intention to curtail my income tax. Will it work?

Reply

365 ashalanshu February 28, 2014 at 5:55 pm

Dear Mad, how can you curtail your own tax from gifting? Is the D’ter a minor or major? In case she a is a major, the income generated from the gifted account can be taxed under her name. Your routine salary or business income tax liability can not be brought down by gifting.

Thanks

Ashal

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366 Manish Chauhan March 2, 2014 at 6:49 pm

No it wont . If you can justify all the answers asked by tax inspector in future, then go do it, else better dont !

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367 ashalanshu February 27, 2014 at 10:53 pm

Dear Biswarup, please receive the money in your ICICI account with out any fear. You are only receiving back your own money given to your friend so question of taxation does not arise.

Thanks

Ashal

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368 Pratibha March 5, 2014 at 8:51 pm

What about donation? If I want to donate one lakh rupees to a person I do not personally know but would like to help them fight their legal case because I feel injustice is being done to them, will they have to pay taxes on that?

Reply

369 ashalanshu March 6, 2014 at 6:17 am

Dear Pratibha, donation can be done to an institution not an individual. Yes if you are giving under your WILL post your death,then such donation can be made.

Thanks

Ashal

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370 Manish Chauhan March 12, 2014 at 6:10 pm

No , donations to anyone does not mean a lot for income tax .. If only its a valid donations covered under some section, you will get income tax exemption under some section for 50% part of donation ,else not !

Reply

371 Gaurav March 6, 2014 at 10:45 am

Sir i got gift of Cash Rs.6 Lacs, Jewelry Rs.4 Lacs & A Car of Rs.7 Lacs on My Marriage and there is no documentary proof relating to the Cash Amount Received as gift. So Plz Tell me whether it is taxable or not in my hands?

Reply

372 ashalanshu March 7, 2014 at 8:28 pm

Dear Gaurav, gifts received at the time of marriage is tax free. As far as question of Cash gifts, well it’s usual practice to give and receive cash gift during marriage, so you can declare the same as exempted income while filing your ITR.

Thanks

Ashal

Reply

373 Vkumar June 16, 2014 at 6:52 pm

I have an query in above case. I want to know that if we are receiving cash amount gift in form of cheque(then there will be proof of transaction), then do we declare the same as exempted income while filing your ITR.

Reply

374 Manish Chauhan July 5, 2014 at 4:00 pm

Depends from where are you getting that gift, if its from parents etc, then you dont have to pay tax .

Reply

375 Sukhdev March 9, 2014 at 2:47 pm

Hi,

I have received an amount of cash of Rs. 60,00,000 from my dad before he passed away. I also sold a property of Rs. 10,00,000. I have deposited both of the amount as Term Deposit and getting MIS (monthly basis).

I am now interested to buy a property. Do I need to pay tax for these income or how should I invest this amount in buying a new property. Should I file ITR or how it works.

Thanks in Advance.

Reply

376 ashalanshu March 10, 2014 at 12:22 am

Dear Sukhdev, the 60L Rs. received as gift from your father is tax free to you. The property sell transaction may invite Long Term Capital Gain tax liability. The interest from your Term Deposits is taxable. Yes keeping the income earned by you from 60L Rs. deposit, you are liable to file ITR. To know more about ITRs, please read this article.

jagoinvestor. com/2013/05/guide-on-income-tax-return-itr-filing-doubts.html

Thanks

Ashal

Reply

377 Manish Chauhan March 12, 2014 at 5:18 pm

Obviously you need to pay income tax on all your income you are getting as interest, why are you not paying tax and filing ITR’s , better meet a good CA now to redo it !

Reply

378 Venu March 13, 2014 at 4:14 pm

If i get the money as a gift from my NRI Friend or given a loan to me, is it taxable in my hands?

Reply

379 ashalanshu March 15, 2014 at 9:06 pm

Dear Venu, if the money is coming as gift, it’s taxable. If it’s loan, no tax.

Thanks

Ashal

Reply

380 Manish Chauhan March 26, 2014 at 7:47 pm

If its a loan, then NO , its not

But if its a GIFT , then yes, above Rs 50k , its taxable unless its on a occasion of marriage !

Reply

381 Palak March 14, 2014 at 6:26 pm

Hi Manish,
Thank you so much for such a detailed and easy to understand article.

My query is :
1) Me and my husband, we both are working overseas (onsite) .
We get Indian salary as well as Per diem for expenses in foreign country.
So we don’t have to pay any tax (in foreign country) on our per diem amount which we are getting in foreign country.

2) So If i transfer my foreign income (per diem) to my husband’s India account and My husband’s foreign income to my India account as a gift.

So, do we need to pay any tax on any amount that we are transferring into each other’s account from overseas account to India account?

Your response will be very helpful to us.

Thanks in advance,
Palak

Reply

382 ashalanshu March 15, 2014 at 9:08 pm

Dear Palak, the allowances paid to you in foreign currency as per diem allowance is tax free. You can freely transfer it to your Indian account.

Thanks

Ashal

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383 Manish Chauhan March 26, 2014 at 7:38 pm

No , if its your own income, you can just transfer it , but if its a income in INDIA , then you pay the tax !

Reply

384 Manish Jandera March 14, 2014 at 8:07 pm

My Father in law wanted to gift me some amount. as the check book was not issued for the account from which check was to be issued. without any consultation he withdrawn the amount and deposited in another account which happens to be my mother-in-law ‘s account and the check is issued by my mother in law. is there any problem with this kind of transaction?
Please advise,
regards…

Reply

385 ashalanshu March 14, 2014 at 10:34 pm

Dear Manish, better to ask your father to create a gift deed that amount has been gifted by him, routed through his wife’s (Your MIl’s) account. This ‘ll stop any future problem from Taxmen.

Thanks

Ashal

Reply

386 Manish Jandera March 15, 2014 at 1:27 pm

I consulted with a CA about this matter. he said that cash transfer from one account to another above Rs. 20000/- is not allowed and attracts heavy penalty. he advised to reverse the transaction i.e. from my MIL’s account to my FIL’s account and then gift it directly to me by getting check book from the bank.

Reply

387 ashalanshu March 15, 2014 at 9:11 pm

Dear Manish, act accordingly.

Thanks

Ashal

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388 Manish Chauhan March 26, 2014 at 7:36 pm

As far as the transaction has happened without any intention to avoid tax, its fine !

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389 Manish Jandera March 15, 2014 at 1:30 pm

i also have to borrow rs. 2 lac from my friend for purchase of house. what documentation needs to be done for this. please advise.

thanks in advance and regards….

Reply

390 ashalanshu March 15, 2014 at 9:11 pm

Dear Manish, please prepare a Loan agreement for the same.

Thanks

Ashal

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391 Manish Jandera March 16, 2014 at 4:58 pm

Thanks a lot Ashal for valuable advice,

Reply

392 kaku March 15, 2014 at 1:36 pm

I have a query,if my father-in-law wants to give 20 lacs cash to my wife and which is no returnable ,do my wife to show some document while deposting this amount at bank to bank .Do taxman ask to my father about this money.

Reply

393 ashalanshu March 15, 2014 at 9:18 pm

Dear Kaku, Bank ‘ll report the matter to Income Tax people. The trail may lead to your FIL and he should be able to justify the source of money from his income and savings. Better to receive the amount directly into her bank account transferred from his own bank account.

Thanks

Ashal

Reply

394 Anil Kumar March 16, 2014 at 3:00 pm

Hi,
I transferred INR 1L to my wife’s share trading a/c. I understand that i have to pay tax on 1L amount for current FY.
This 1L amount was invested in buying few shares + Mutual fund + some amount was loss in trading.
My question is:
1. For loss in trading, I am assuming I have to show this as carry forward loss.
2. For shares + Mutual fund which were bought, these have grown in price – I don’t intend selling before a year so that profit will become LTCG. Do I still need to show current amount in ITR2. If yes, which sheet in ITR2?
3. For this 1L amount, if any profit is earned by my wife by investing in FD/STCG for NEXT FY, Do I still need to add that profit in my next returns for next FY ?

Thanks in advance
Anil Kumar

Reply

395 Anil Kumar March 16, 2014 at 3:03 pm

4th question is – Do I need to show this 1L amount in my wife’s ITR2. If yes which sheet ? I intend using ITR2 as I want to show CFL.

Reply

396 Manish Chauhan March 26, 2014 at 7:21 pm

No , profit earned on profits is going to be your wife income

Regarding your ITR questions, please open a thread on our forum – http://www.jagoinvestor.com/forum

Manish

Reply

397 ashalanshu March 16, 2014 at 6:34 pm

Dear Anil, if any income, be it STCG or Interest is earned from the gifted amount, you need to report it in your own ITR. LTCG as and when happens are also part of your own income. STCL can be forward by you in your own ITR.

Thanks

Ashal

Reply

398 Amish March 18, 2014 at 3:19 pm

Hellow,

I am a salaried person, i want gift 10 lacs to my 3 friends so how can i do the same? is there any limitation or rules to do the same?

Reply

399 ashalanshu March 19, 2014 at 2:16 am

Dear Amish, you mean to say, you want to gift 10L Rs. to each of your friend (total 30L Rs.) or is it 3.33L Rs. to each friend?

You can gift this amount under a gift deed but this ‘ll be a taxable income to your friends.

thanks

Ashal

Reply

400 Manish Chauhan March 26, 2014 at 7:05 pm

There is no rules , you can give it anyways .. its your friend who has to worry , not you !

Reply

401 Tito March 26, 2014 at 1:01 pm

Sir,
Wife is a teacher earning Rs 12,000 per month and annual income in current FY is Rs1,44,000. She has been gifted Rs Nine lakhs by husband in current FY which she invested in bank FD on which she will get interest of approx Rs 81,000.Is her taxable income Rs 1,44,000 plus Rs 81,000? OR will the Rs81,000 be clubbed in taxable income of husband.

Reply

402 Manish Chauhan March 26, 2014 at 1:13 pm

This 81,000 will be clubbed with husband income and he will have to pay the tax. ALso note that wife should given form 15G to make sure that no TDS is cut !

Manish

Reply

403 Tito March 26, 2014 at 6:29 pm

Thank you sir for the prompt response.

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404 T April 4, 2014 at 6:34 pm

1. If I gift my mother Ten lakhs, and she invests it in FD, will the interest be taxable under her name or mine?
2. Do I need to create a gift deed for the same?

Reply

405 ashalanshu April 6, 2014 at 2:48 am

Dear T, You can gift 10L Rs. to your mother. It should be under a gift deed to avoid any future problem from income tax authorities. The FD interest is now taxable under mother’s name.

Thanks

Ashal

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406 Manish Chauhan April 10, 2014 at 2:06 pm

1. Her name
2. No need!

Reply

407 T April 4, 2014 at 6:44 pm

If I invest in my wife’s name in mutual funds would the gains obtained after 1 year be taxable under my name or my wife’s name?
2. What about ETF investments?

Reply

408 ashalanshu April 6, 2014 at 2:51 am

Dear T, income generated from investment made by you under your wife’s name is your income. If the income itself is taxable, it ‘ll be in your name. If the income is nontaxable, it’s non taxable for you.

Thanks

Ashal

Reply

409 Manish Chauhan April 10, 2014 at 2:06 pm

1. If its equity mutual fund, then anyways tax is not there on profits, before 1 yr, it will be taxable under your income

2. Same !

Reply

410 R.Das April 14, 2014 at 1:26 pm

Sir
Currently self and wife owning property of flat ( joint owners) and just finished the housing loan. I want gift this property to my wife and is it possible.? If so, whether both has to sign the documents and if so, what are the documentation I(we) should do and what is the tax implication ..

Reply

411 ashalanshu April 15, 2014 at 2:27 am

Dear R. Das, what benefit ‘ll you get from this gifting?

Thanks

Ashal

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412 Manish Chauhan April 21, 2014 at 3:27 pm

You can just transfer it to your wife .. nothing to be done here !

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413 kamal April 20, 2014 at 3:25 pm

Dear sir
Your article on Gift Tax is very educative and I thank you very much for the same I have a query can you help me with this:- I am 52 years old and I would be having a income of Rs. 210000/- in the year starting 1-4-2014 . If I invest Rs. 10000/- in a 80C instrument thereby making my Tax zero in such a case can I issue a 15G form for non deduction of tax at source to my banks. My accountant
says that you arrive at TOTAL INCOME by reducing 80C from GROSS TOTAL INCOME and you promise in 15G that your TOTAL INCOME will not exceed the maximum amount which is not chargeable to Tax.But I have my doubts so kindly clarify I would be most THANKFUL.
KAMAL

Reply

414 Manish Chauhan April 21, 2014 at 11:08 am

Yes, you can file a form 15G so that they dont deduct your TDS . go ahead !

Reply

415 ashalanshu April 22, 2014 at 8:49 am

Dear Kamal, your accountant is correct. 80C benefit can be claimed to arrive at net taxable income figure. so you can file form 15G.

Thanks

Ashal

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416 Kittu April 21, 2014 at 5:41 pm

My Father in law gifted me Rs. 600000/- in my wedding. i did not need this money at that time so i returned it back to him. He deposited it into an account which is a joint a/c of my FIL and his daughter (my wife). Now my FIL got retired and from amount he received as superannuation benefit he gave me a cheque of Rs. 15 Lac. (gift) for another account for purchase of house. we have prepared a gift deed for this amount. Rs. 600000/- (wedding gift) still lying in the aforesaid joint account and i no longer need it. Please guide me as to whose income it will be treated and what are the tax implications for this 6 lac. How to justify this transaction. please suggest.
Thanks in advance.

Reply

417 ashalanshu April 23, 2014 at 12:14 pm

Dear Kittu, how the 6L Rs. in joint bank account came originally? Please display the money trail.

Thanks

Ashal

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418 ashalanshu April 23, 2014 at 12:16 pm

Dear Kittu, please display the money trail in detail for how the money originally landed into join bank account for this 6L Rs.

Thanks

Ashal

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419 Kittu April 24, 2014 at 11:54 pm

Sir, i received this amount as wedding gift from my in-laws side in the form of cash. I returned this to my FIL asking him that he may help me with this money whenever i buy a house for me. he parked this money to the joint account of him with his daughter (my wife). at that time, i & my wife were not aware as to where he deposited this money. Now, i bought a house & my FIL got retirement, he voluntarily gave me a Cheque of Rs. 15 Lac instead of Rs. 6 lac from the superannuation amount. we also prepared a gift deed for this amount. He issued this cheque from his salary account & Rs 6 lac still parked in the “Joint Account”.
plz suggest..
Thanks in advance.

Reply

420 ashalanshu April 25, 2014 at 2:05 am

Dear Kittu, from your query what I understood is – your FIL gifted 6L Rs. in cash at the time of wedding. The same was returned in cash by you to him. Now this 6L Rs. was deposited by your FIL in a Joint FD with your wife. In all probability, the FD in question is bearing first name holder as your FIL and 2nd name as your wife.

From the above situation, as no gift deed was made and no cheque was used for transaction during wedding time. Actually no gifting took place. Now this 6L Rs. is not your capital as on date. It’s FIL’s capital. In case he wants to gift this 6L Rs. (actually more due to interest earned on FD), he may gift it directly to you or your wife under a new gift deed.

In my personal opinion, you should receive this new amount as gift to your wife, to avoid taxation from future earning on this amount if you receive and invest under your own name.

Thanks

Ashal

Reply

421 Kittu April 25, 2014 at 5:39 pm

Thanks very much for this valuable guidance.

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422 Manish Chauhan April 30, 2014 at 10:52 am

I guess you can go ahead and take this money . No issues as this is gift from father in law only for house purchase. If you have a CA, just double check with him !

Reply

423 Ajay Dahiya April 25, 2014 at 12:11 pm

My father is constructing a house and for Ease of many Payments he has given a Cheque of 3.5 Lacs and 07 Lacs which i deposited in My account. When every there is a need to make payment for the Material i withdraw the amount from ATM and make the payment.
Further i Purchased a New Car for Which My Father Made a Payment for 07 Lacs directly to the dealer by Cheque. The Car is billed in My name.
The amount paid by my father for the CAR will be returned by me by Dec14 in Full.
I have Query as follows
1. Does this have any Tax implication on me or my father(Retired – IAF).
2. Do i need to make any formal / legal documents for the same as currently we are only keeping the Track of Money by entering in Diary with Date.

Reply

424 ashalanshu April 25, 2014 at 8:01 pm

Dear Ajay, if the expense for construction was to be debited from account by ATM card, the same can be done by your father’s ATM card from his own account.

For car related amount, please purchase a zero interest loan document between both of you.

Thanks

Ashal

Reply

425 kamal April 26, 2014 at 11:12 am

URGENT
Dear sir

I thank you so much for your advice regarding submission of 15G form even if total income is more then Taxable limit but becomes less than the taxable income after reducing 80C .Sir I came across a article on internet with the heading DO’S & DONT’S of FORM 15G & 15H………..which says as following

” Who can submit form No. 15G?

( Only the individual or HUF, whose tax on the estimated income for the year is nil and the amount of interest income from all the sources does not exceed the minimum exemption limit, can submit this form. So for being eligible for you to submit this form, you need to satisfy both the above conditions. In a situation where due to various deductions the tax payable on total income may be nil but if the total amount of interest income is expected to exceed Rs. 2 lacs you cannot submit this form.) ”
So sir in the light of above kindly tell me As what you say & what this article says are opposite to each other ,What is correct LEGALLY.
Also Sir there is one more matter in the case of my wife she will have an income of 190000/- so she has submitted form 15G now her real Aunt has gifted her a sum of Rs 200000/- now if she invests this amount in bank FD the income will exceed 200000/- what can she do ? should she wait before investing so that the interest does not exceed Rs 10000/-or she can go ahead any time ? Because this thing could not have been estimated before.
Also from YOUR article on GIFTS I assume that because the gift is from real Aunt(Masi) she will not have to pay any tax on the GIFT received.

Awaiting your reply & Thanking you in advance,Please give the reply at the earliest so that I can submit form 15G in my case before the banks deduct TDS please note that my income is interest income from Post office MIS, Post office Time Deposit & interest on Fixed Deposit s in two different banks.

KAMAL

Reply

426 ashalanshu April 26, 2014 at 12:38 pm

Dear Kamal, why all the money should be in FDs only? Why can your wife not put some money in debt funds?

Thanks

Ashal

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427 kamal April 28, 2014 at 11:22 am

Sir I am not aware of what debt fund is and so am quite satisfied in keeping my money with the banks kindly advise me as to my queries in my previous letter
Thanking you
Kamal

Reply

428 ashalanshu April 28, 2014 at 5:03 pm

Dear Kamal, if some thing is not know to you today, ‘ll you remain ignorant for it forever?

Thanks

Ashal

Reply

429 kamal April 29, 2014 at 11:06 am

Dear Sir
My original Query dated 26 Apr 2014 remains unanswered kindly throw some light on it I would be most thankful.As the two opposite informations regarding the use and non use of form 15G is very very confusing kindly help out I would be very very thankful.If I do’nt give the form 15 G my TDS amount will be about 17000/-which if if possible I would like to avoid although I do’nt want to commit any offense also at the same time so once again I would request to guide me to the correct path.

KAMAL

Reply

430 Manish Chauhan April 29, 2014 at 8:33 pm

Ok , tell me this , What is your yearly income ? Is it below the taxable limits ?

Reply

431 kamal April 30, 2014 at 11:08 am

Dear Sir
I have my total income comprises of Interest from Post Office Monthly Income Scheme & Post Office Time Deposit ( approx Rs 35000/-) + from Bank Fix Deposits (approx Rs 175000/-) = TOTAL INCOME comes to Rs 210000/- .If I use 10000/- worth of 80C to make my income not chargeable to Income Tax in such a case you say I can use 15G but the other article says that I can not use it because I have used 80C to get to the no Tax limit
range This is what is confusing me.My all the income is interest income but distributed as above mentioned way. Implying that my total income is above 20000/- while from bank deposits it is about 175000/- only. so please guide me accordingly.
Thanking You,

Kamal

Reply

432 Manish Chauhan May 7, 2014 at 4:22 pm

In you case, you can use 15G !

Reply

433 ashalanshu April 30, 2014 at 1:10 am

Dear Kamal, If net tax liability is NIL due to benefit of section 80C, once can file form 15G. Condition – the interest income itself should not be beyond the Zero Tax slab range. For that matter your interest income should not cross the 200000 Rs. figure.

Please check this for your own satisfaction.

http://www.dnaindia.com/money/comment-who-is-eligible-for-filing-forms-15g-15h-and-how-to-save-tds-1582203

Reply

434 kamal April 30, 2014 at 11:32 am

Dear Sir

My Total income is as follows
Income from Post Office Monthly Income Scheme & Time Deposit
=Rs 35000/-
Income from Bank Fixed Deposits =Rs 175000/-
__________
Total Income Rs 210000/-
Please provide me the solution __________
With the investment of Rs 10000/- in 80C can take advantage of form 15G.

KAMAL

Reply

435 ashalanshu April 30, 2014 at 11:38 am

Dear Kamal, for your given case, as your total interest income is more than 2L Rs. you can not file form 15G. My personal take, please remove few FDs so that combined interest income from POMIS, POTDs and FDs remain below 2L Rs. For this changed situation you can file form 15G.

Now what to do with the money remove from FDs? You can park the amount in debt funds. Here no tax till you do not redeem.

Thanks

Ashal

Reply

436 J S Brar April 30, 2014 at 8:59 am

Query
My father is an NRI. Will the money from him as a gift for my personal use be taxable to me. how much cash can he give and how much by cheque.
thx
J S brar

Reply

437 Manish Chauhan April 30, 2014 at 9:49 am

No it will not be taxable to you upto any limit .

Reply

438 ashalanshu April 30, 2014 at 11:40 am

Dear J S Brar, just to add in reply by dear Manish, please do not accept anything in CASH. All the gifted amount should be either through Cheque or Netbanking.

Thanks

Ashal

Reply

439 Vishal Singh May 2, 2014 at 2:21 pm

Hi ,

We have one ancestral agricultural land wroth Rs 30 lakh and we are selling that. The land is in joint name (me and my mother’s name). So we will share the Rs30 lakh (15lakh each). Now with this money I want to buy a new flat and Instead of taking my mothers share rs 15 lakh as gift, I am taking this money as loan from my mother. I will repay the loan with interest in EMI (10 years EMI). I think I can still claim tax rebate on interest of loan (on my salary income). Can you confirm that? But what will be tax implication on my mother as I am giving interest on loan and that is income for her.

Regards,
Vishal

Reply

440 ashalanshu May 4, 2014 at 2:58 am

Dear Vishal, the interest earned by your mother on her 15L Rs.loan given to you ‘ll be her taxable income.If her total income is more than taxable income, she w’d have to pay tax on it.

Thanks

Ashal

Reply

441 Manish Chauhan May 7, 2014 at 3:40 pm

Yes, you can claim the interest part easily ..

All you need to do is make a formal agreement , talk to a lawyer or CA .. he is will you in that . Also the EMI you pay back to your mother will be considered as her income and she will have to pay tax on that !

Reply

442 pandit May 10, 2014 at 8:53 pm

Hi Manish,

assume my income is 10Lakhs and i will gift 5lakhs to my wife.
is there any tax exemption i can claim on the 5Lakhs i gifted?

-pandit

Reply

443 ashalanshu May 12, 2014 at 3:58 am

Dear Pandit, the plain answer is NO. You can not claim any tax benefit on such gifting.

Thanks

Ashal

Reply

444 Manish Chauhan May 19, 2014 at 1:27 pm

No , there is never a tax exemption for person who is gifting !

Reply

445 Gaurav May 10, 2014 at 9:30 pm

My mother in law want to gift 12 lakhs to her daughter i.e my wife. Then this money will be invested by my wife in FDs.
My first question is will the interest earned will be my wife’s income or her mother’s income.?
My second question is– if this money is used to open ppf account of 2 minor children then is there any tax liability , who can claim rebate of 80c, is this a better option, kindly give sugestions..

Reply

446 ashalanshu May 12, 2014 at 4:03 am

Dear Gaurav, post gifting, the 12L Rs. in question is your wife’s money. Any FD interest or other income generated from this amount ‘ll be taxable for your wife.

Can you explain in detail, what do you want to ask regarding PF for 2 minor kids? Reason, how can your wife deposit all the 12L Rs. in 2 PPF accounts in one year when the combined limit of investments for a parent and minor guardianship accounts is 1L Rs?

Thanks

Ashal

Reply

447 Manish Chauhan May 19, 2014 at 1:26 pm

1. NO , it will be your wife income only

2. Once the gift is received, its your wife money .. after that when she invests in kids PPF , she can claim the 80C benefits !

Reply

448 sudhir bhola May 11, 2014 at 5:34 pm

Dear Sir,
1. We are two brothers in Govt service. we both have two children each more than 18 years. My Father wants to gift Rs 1 lakh each to his four grand children.
2. What are the tax implications for him and for the grand children and what documentation should be done. Please clarify at the earliest. My mail id is given above.
Regards

Reply

449 ashalanshu May 12, 2014 at 4:07 am

Dear Sudhir, please ask your father to prepare 4 different gift deeds, one deed for each grandchild.

No tax on your father on the gifted amount. If the grandchildren in question do have taxable income, the income earned from this 1L Rs. ‘ll be added in their respective income and taxed as per their slab rate.

Thanks

Ashal

Reply

450 Manish Chauhan May 19, 2014 at 1:17 pm

No tax implications for grand children .. for grandfather , he has to make this gift out of this TAXED INCOME only ..

Reply

451 MURTY May 19, 2014 at 8:29 am

Dear Sir,

I want to part pay my housing loan and my brother would like to help by transferring some money. Should he transfer to my savings bank account first and then I transfer the same to my housing loan bank account or can my brother directly issue a cheque to my housing loan account. Also what are the proofs I need to keep for income tax scrutiny purposes

Reply

452 Manish Chauhan May 19, 2014 at 8:43 am

He should transfer it to your account and then you pay the loan !

Reply

453 J.P.MITTAL May 20, 2014 at 12:05 pm

Dear Sir,
Your article on Gift Tax is very informative. I have a query :
I am an NRI in Dubai for last 35 years. Recently my brother died suddenly. His wife (my bhabhi ji) has no source of income. I want to gift her Rs. 20 Lakhs so that she can sustain her expenses. I have opened her a/c with HDFC bank where I also have my NRO a/c.
My questions are :
1. If any gift tax payable.
2. Can I transfer this amount to her a/c by netbanking or I should do it by deposit of cheque in her a/c.
3. Do I have to take any RBI permission or FEMA permission because the transfer of funds is from my NRO a/c.
4.4. Or I have to compulsorily transfer by NRE a/c or remit in foreign exchange from Dubai.
Kindly advise. Thanks in advance.
Mittal

Reply

454 ashalanshu June 16, 2014 at 5:58 am

Dear J P Mittal, here are the answers for your queries.

1. NO gift tax on you or your bhabhi
2. Netbanking ‘ll do – It’s equal to physical cheque.
3. Simply transfer from your NRO account. No permission is required.
4. If money is there in NRO account transfer from it. If money is falling short in NRO, make it up from NRE to her account directly. In case still some short fall is there you can directly transfer from Dubai to her account. So the bottom point is you can transfer from the account of your choice.

Thanks

Ashal

Reply

455 Ravi May 21, 2014 at 3:42 pm

Hi

I am NRI reisding in Malaysia. One of my friend in India needs money of Rs 2 Lac for around 3 months. Couple of questions i want to clarify

1) Shall I issue him check directly from my NRE account ( bank of India) to His name? or shall I transfer money from my NRE account to NRO account and then issue check in his name from NRo account as I plan to deposit the refund after 3 months in my NRO account

2) If I do a net banking from my NRO account and while return if I take amount by check will there be any issue

3) do I need to document this transaction in white paper or is Post date check enough for transaction from Tax prespective

Reply

456 Manish Chauhan May 29, 2014 at 12:04 pm

You can transfer money in any manner (bank transfer) ,but it would be a good idea to take post dated cheque !

Reply

457 trip May 21, 2014 at 10:44 pm

Dear Manish,

My husband is an NRI and would like to gift my mother i.e his mother-in-law cash gift exceeding Rs 50,000. Will it be taxed?

Thanks for starting this website. It is very useful.

Reply

458 atul May 24, 2014 at 8:43 pm

No, it won’t be taxed. Even if it is more than Rs. 50,000. Any gifts received from lineal descendants or their spouse is not taxable.

– Any of your lineal ascendants or descendants
– Any lineal ascendant or descendant of your spouse
Spouse of the persons referred in above points

Reply

459 Manish Chauhan May 29, 2014 at 10:47 am

No , there wont be any tax for mother in law !

Reply

460 gaurav sharma May 26, 2014 at 5:08 pm

Hi ,

Please suggest for my query:-

I have a home loan outstanding of 26 lacs and if my mother sell a house which is on her name .is it possible that i can pay my home loan with that money. do i need to get any legal documentation as this is a large amount taken from parents and also it has to transferred to my bank account so in terms of income tax can it result in some tax liabilties.

Please help.

Regards
Gaurav Sharma

Reply

461 Manish Chauhan May 29, 2014 at 10:11 am

You dont need any documentation .. money taken from parents dont attract any documentation !

Reply

462 Gaurav P June 16, 2014 at 1:53 pm

Hi Manish,

Consider a case : say my uncle(who stays in US) has transferred some x lacs of amount in my account (I stay in India). So that my aunt can use that money from my account in India.
In this case, Will I have to pay tax for the amount that ws tranferred by my uncle in my account?
If not, then what can be considered as a document of valid proof in this case, to not to pay tax in this situation?

Thanks in Advance !

Regards,
Gaurav

Reply

463 ashalanshu June 23, 2014 at 12:16 am

Dear Gaurav, why are you complicating the matter? Ask your uncle to transfer the amount directly to your Aunt’s account. As simple as that.

Thanks

Ashal

Reply

464 Manish Chauhan July 5, 2014 at 4:05 pm

I suggest not to do this .. why are you not taking money in your aunt account itself . If she does not have an account, the best thing would be to open an account for her . It adds to some task , but then saves you from lots of hassles later.

Manish

Reply

465 Gaurav P July 8, 2014 at 4:43 pm

Actually doesnt have an account in India. In my case, what legal document should I own to get the tax benefit on this amount or there is no option left for me than paying tax. :(
Thanks

Reply

466 Gaurav P July 8, 2014 at 4:44 pm

Actually *she doesnt have an account in India.

Reply

467 ashalanshu July 31, 2014 at 11:56 am

Dear Gaurav, actually the money received is tax free to you but any income generated from such money may be taxable for you.

Thanks

Ashal

Reply

468 ajmer singh June 16, 2014 at 5:30 pm

i gifted rs. 15 lakhs to my wife( house wife) and she invested in FD in a bank for one F/Y. But will be the interest liability in the next F/Y. Will it to be clubbed to my income or not in the next F/Y.

Reply

469 ashalanshu June 23, 2014 at 12:18 am

Dear Ajmer, the basic interest is your income. the interest on interest is her income.

Thanks

Ashal

Reply

470 Manish Chauhan July 5, 2014 at 4:01 pm

It has to be clubbed to your income !

Reply

471 Manish Chhajer July 5, 2014 at 6:32 pm

Very useful article Manish!!
I have a query. I’ve transferred X amount to my wife account. My wife has invested those X rs. on FD and got interest of say Y. Can I consider X amount as loan given to my wife with 0% rate so that I do not need to pay tax on Y.
I’ll have a transaction of amount X from my wife in future to complete the loan transaction. And can I take amount Y as gift from my wife?

Reply

472 ashalanshu July 31, 2014 at 11:59 am

Dear Manish, do it at your own risk. Be ready to face the queries from Income Tax officials later on.

Thanks

Ashal

Reply

473 Nishant July 7, 2014 at 2:03 pm

Hi Manish, my sister gave birth to baby boy six months back. Can the baby receive cash gifts from various relatives amounting to Rs 5 lakhs? Can the mother use this money as a loan in her account to buy stocks/shares for her baby’s future? Will any documentation( gift deed,etc) be required to show such a transaction?

Reply

474 ashalanshu July 31, 2014 at 12:01 pm

Dear Nishant, how can a 6 months old minor enter into a loan agreement to give loan to own mother?

Thanks

Ashal

Reply

475 Kittu July 9, 2014 at 12:05 am

Dear sir.
i received gift of Rs 18 lac from my father in law for purchase of house. please tell me how to show this amount in Income tax return for this year?
thanks.

Reply

476 ashalanshu July 31, 2014 at 12:03 pm

Dear Kittu, please declare the same as exempted income.

Thanks

Ashal

Reply

477 Manish Chauhan September 21, 2014 at 10:11 pm

You dont have to pay tax on it !

Reply

478 AJMER SINGH July 12, 2014 at 10:58 am

CAN I CLAIM INTEREST OF FD’S IN THE F/Y IN WHICH THE FD MATURED OR IT SHOULD BE CALCULATED QUARTERLY FOR INCOMETAX PURPOSES.

Reply

479 ashalanshu July 31, 2014 at 12:06 pm

Dear Ajmer, banks apply TDS on accrual basis for each FY, hence it’s advisable to declare the interest for each FY.

Thanks

Ashal

Reply

480 Manish Chauhan September 21, 2014 at 9:46 pm

It should be calculated on yearly basis for income tax purpose

Reply

481 nk July 12, 2014 at 7:51 pm

Hello Ashal/Manish,
I receive an amount of Rs 50,000/- from my ex husband as spousal/child support every month.This comes from the US through remit2india..Do I need to pay tax on this?
Thanks

Reply

482 ashalanshu July 31, 2014 at 12:17 pm

Dear NK, no. the maint. money received for you and your kids from your ex husband is not taxable.

Thanks

Ashal

Reply

483 Manish Chauhan September 21, 2014 at 9:42 pm

Yes, It has to be treated like an income only

Reply

484 dev July 15, 2014 at 4:11 pm

Hi,
my father wants to gift me his property. what tax rate/stamp duty or any other expenses will I have to incur?
Rgds

Reply

485 ashalanshu July 31, 2014 at 12:18 pm

Dear Dev, please contact an advocate in your city to know the stamp duty applicable in your case.

Thanks

Ashal

Reply

486 Manish Chauhan September 21, 2014 at 8:25 pm

None . You dont have to pay anything

Reply

487 anubha July 22, 2014 at 4:04 pm

Hi

If we are presenting a gift( cash amount) to our parents, then they dont have to pay tax on it. But somewhere I read that the gifted amount will be reduced from our taxable income and thus gifted amount will become non taxable to us also. Is it possible? If yes then under which section we should mention this in ITR form. Please reply.

Reply

488 SM Vishwanath July 25, 2014 at 1:18 pm

The gifted amount cannot be reduced from your taxable income. You have to pay tax on your income. However, your parents do not have to pay tax on your gifted amount.

Reply

489 Manish Chauhan September 21, 2014 at 1:14 pm

There is nothing like that. Your gifts come out only from your POST TAX INCOME

Reply

490 SM Vishwanath July 23, 2014 at 9:14 pm

Dear Manish, Greetings and thanks for all the information on this lovely blog.
I put up a query with a tax consultant and raising the same here …….. I shall be obliged for a clarification regarding this query !
Myself and my wife – are ‘professionals’,have separate incomes and are regular ‘individuals’ tax-payers.
Can my wife ‘gift’ me – say 1 lac out of her ‘tax-paid’ income by cheque ?
If I invest this amount in FD, will the interest generated from the same be deemed as my income or will it deemed as hers (clubbed) !
The point I want to make here is – my wife and myself are having separate sources of income – then how can this interest income from FD of the gifted amount be ‘clubbed’ with her income. I sincerely believe ‘clubbing’ provision comes if the ‘spouse’ does not have a ‘separate’ / ‘independent’ income like in case of a minor. If the spouse already has ‘independent’ income from ‘multiple’ sources then this gift interest income should not be clubbed with the other spouse’s income. I shall be most obliged for a reply on this query ! Thanks and best regards.

Reply

491 ashalanshu July 31, 2014 at 12:24 pm

Dear Vishwanath, clubbing provisions ‘ll still apply.

Thanks

Ashal

Reply

492 SM Vishwanath July 31, 2014 at 10:18 pm

Yes ! You are right ! Many thanks and regards.

Reply

493 Manish Chauhan September 21, 2014 at 1:04 pm

It will be considered as the income of the person who has a higher tax slab .

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494 Rohan August 1, 2014 at 4:21 pm

Dear Sir,

My parents have shares of almost Rs.120000/- in their join name. Now they want to give that shares as gift to me.

If i sell that shares after few days / month and buy car with that shares amount and my personal savings then what it effect in my i.t return?

Is there any tax i have to pay in above ?

Thanks,
Rohan

Reply

495 ashalanshu August 5, 2014 at 5:23 pm

Dear Rohan, what’s the holding period of such shares in your parent’s demat account?

Thanks

Ashal

Reply

496 Rohan August 5, 2014 at 5:39 pm

Dear Ashal,

Holding period is more than 20 years and this shares are in physical form only not in demat.

Thanks

Rohan

Reply

497 ashalanshu August 6, 2014 at 7:27 am

Dear Rohan, in my personal opinion, convert these shares in demat mode under your parents’ name and sell from there only to save on transfer costs.

Once money is there with your parents, they can gift it to you and you can use the money for your desired way. No tax ‘ll be there on your parents for selling the shares and no tax on you receiving the gift of money from your parents.

Thanks

Ashal

Reply

498 Manish Chauhan September 20, 2014 at 6:34 pm

Not you, but your parents might have to consider the taxation part !

Reply

499 Rakesh sahoo August 6, 2014 at 8:39 pm

Dear sir,
I want some clarification.

My own uncle was in need of money. Of 2 lac. So i helped him by taking a Personal loan on my name. Now every month he deposits the emi amount to my account and the same amount is also deducted from my salary. In this case the amount deposited by my uncle, will it be taxable to me.

Secondly. My father got rs 15 lac after his retirement. Now he gave me 10 lac for use in my marraige which is in near future. So will that amount will be taxable.
Now , if i invests the same in fd. Then who will be charged for the tax. Father or me.
Do i have to make any documentation for the same.if yes., what kind documentation or deed ,i have to do.

Kindly suggest.

Reply

500 ashalanshu August 18, 2014 at 10:50 am

Dear Rakesh, the EMI amount received by you from Uncle is not taxable to you. Money received from your father is also tax free.

If the father money is invested in FD under your name, the interest ‘l be taxable in your own name.

Please prepare gift deed for you and father and loan deed for you and uncle.

Thanks

Ashal

Reply

501 Manish Chauhan September 20, 2014 at 6:15 pm

No , the money will not be taxable in your hand, but how did you pay your uncle the money , If it was withdrawn and paid in CASH, then you have no proof that its a loan .

Reply

502 ramakrishna August 11, 2014 at 3:45 pm

sir,please clarify this doubt.
my son had employed after his engineering, in a company. he worked for 18 months. and later he resigned. now he is unemployed. I am giving him 20000 per month. can his income tax show this amount as “income” and can he file return next year. Please advise.
ramakrishna

Reply

503 ashalanshu August 18, 2014 at 10:52 am

Dear Rama, the money paid by you to your son is tax free for him, why do you want to treat this as income for him?

Thanks

Ashal

Reply

504 Manish Chauhan September 20, 2014 at 5:55 pm

Its not his income . He does not have to pay any income tax

Reply

505 yogi August 12, 2014 at 12:33 pm

sir i have taken almost 11,00000 almost from my friends & family, to invest in share trading, returning them time to time. those transactions are listed in bank account, will i have to pay income tax for that. if yes than how i have to pay. thanks & regards

Reply

506 ashalanshu August 18, 2014 at 10:53 am

Dear Yogi, if you are returning back the taken amount, you can treat this amount as loan and should have loan deed for the same.

Thanks

Ashal

Reply

507 Manish Chauhan September 20, 2014 at 5:50 pm

Yes, you will have to pay income tax on that.

Reply

508 uday August 19, 2014 at 9:53 am

Hi,
My parents are retired and I paid monthly 50k for their expenses .. if they invest some portion or total amount on shares or real estate. who will be taxed on that gains ?

Reply

509 ashalanshu August 22, 2014 at 4:32 am

Dear Uday, the income ‘ll be in the names of of your parents, hence taxable to them only.

Thanks

Ashal

Reply

510 Manish Chauhan September 20, 2014 at 5:18 pm

They will be taxed

Reply

511 Rahul Sharma August 25, 2014 at 2:43 pm

Dear Sir,

Gud evening sir, please solve my query.

I have one query regarding Tax on Capital gain or Gift .

My father has sold his property to my massi(Mother’s sister) for the consideration
of Rs.20 Lakhs. Registry of this property will not be made in the name of Massi.
i.e property will not be transferred to massi on documents. After receiving
consideration, Father has transferred consideration to his son bank account.
Then after Son has purchased another property for a consideration of Rs.40 lakh
by using this fund Rs 20 Lakhs & loan from Bank Rs.20.

So my Query is that:

1. What will be tax implication on father & son income ? Whether father can claim
Deduction Under section 54.

2. Whether these transaction can be claimed as a gift. If so, then it will be
exempt in the hands of father & son ???

Reply

512 Manish Chauhan September 20, 2014 at 4:53 pm

This is a bit complicated and a CA should be consulted for this

Reply

513 ashalanshu September 24, 2014 at 9:40 am

Dear Rahul, How your father is going to show the receipt of 20L Rs. from his Sister in law (your masi) in his own income tax return? If there is no actual name change in property, there is no sell of property unless some kind of agreement is there to register on a later date.

Can you share more details?

Thanks

Ashal

Reply

514 Nakul August 26, 2014 at 10:31 pm

Hi Manish

I have one query related to gift deed and capital gains tax for residential property.
My father has 2 flats on his name. He wants to sell one of the flat and buy a new one. But the flat he wants to sell has appreciated by 5 times and would attract considerable capital gains tax if he sells it and buys a new one.
To avoid that, can he gift the flat to me with proper gift deed prepared and stamp duty paid and then I sell that flat to buy a new one? Currently I have no flat on my name, and my father would not mind if the new flat is on my name instead of his.

What I’m trying to do is save capital gains tax by paying lesser amount of stamp duty while preparing gift deed. I want to ask if it is a correct approach or has some flaw in it?

Thanks & Regards
Nakul

Reply

515 Rahul Sharma September 3, 2014 at 4:13 pm

Yes, it is good approach. There will be no capital gain whether in your hand and father hand. You will get benefit u/s 54 in respect of sale of old sale.

Reply

516 Manish Chauhan September 20, 2014 at 4:30 pm

It will not work

Even if you sell it later, the taxation will come into picture the same way . I think you should discuss it with CA

Manish

Reply

517 ashalanshu September 24, 2014 at 9:44 am

Dear Nakul, if you are receiving the flat as gift from your father, it’s construction or purchase price ‘ll remain same for you. How come you can save on LTCG tax liability?

Please disclose that this 5 times gain is indexed or not?

Thanks

Ashal

Reply

518 Kumar Gaurav September 2, 2014 at 11:42 am

Hi Manish,
My father has recently retired. I have to buy a car and he is helping me to buy it. Will it better to take it as a gift or a loan form IT perspective?

Reply

519 Rahul Sharma September 3, 2014 at 4:10 pm

It is better to take it as a gift because if you will take as a loan then you should pay interest to your father as per IT rules and also tds liability on that interest will arise . Your liability will arise to make deposite tds on govt account.

Reply

520 Manish Chauhan September 20, 2014 at 3:53 pm

You wont benefit in any way because there is no income tax benefit for car loan :)

So just ask him to transfer the money to your account, or he can directly make payment for car .

Reply

521 ashalanshu September 24, 2014 at 9:52 am

Dear Gaurav, From financial perspective, why do you want to ruin your father’s retirement? If you want to purchase a CAR, please take a loan from bank and pay interest to bank.

Thanks

Ashal

Reply

522 Rajesh September 2, 2014 at 7:38 pm

Hi,

It would be really wonderful if you can help me with this query.
My father is a retired person, with no income except the interest on Fixed Deposits that he has made. He is planning to sell a house which was in his name and want’s to help me in buying a house (in my name) in another city by gifting me money. He intents to put the money in my and my wife’s bank account in instalments.
Can you please tell me:
1. What are the legal formalities required on his part to gift us the money?
2. What would be his tax liability?
3. What would be my tax liability because of this gift?
4. Should the house ( that we intend to buy) be registered in both mine & my wife’s name? or would it be fine if I register in my name only?

I would really appreciate your response

Many thanks.

Reply

523 Rahul Sharma September 3, 2014 at 3:44 pm

(1) There is no any specific formalities but your father may write on a plain paper mentioning that he has made gift to you and your wife along with money ,date & way of mode. In case your & your wife’s income tax case will found in scrutiny then this statement will help you for explaining this transaction.

(2) Your father’s liability would be capital gain which arise from sell of his house.

(3) There is no tax at all on gift. so your liability is nil

(4) There is no mandatory requirment that house should be registered with both name. even your wife can also gift to you. But your registry charges(stamp paper ) would be less if any ladies name (your wife name) will register in sale deed.

Reply

524 Manish Chauhan September 20, 2014 at 3:46 pm

1. Note that a father can gift any amount to you guys without any documentation .
2. The money he will gift you has to come form his POST Tax income, so he will not save any tax on it
3. None
4. You can register it in your name only if you want. No issues

Reply

525 Rajesh September 3, 2014 at 3:48 pm

Thank you Mr. Rahul for the prompt response! Really appreciate it…

Reply

526 Ash September 4, 2014 at 1:56 am

Hey
Very nice article. I have an urgent query and would appreciate if you could help me with it. We have a property in my mothers name and now that has been sold to someone. I understand that the proceeds from the sale will have to be deposited in my mothers name. And to save on the capital gain we also plan to purchase a new residential house with the sale proceeds.
The question is the new house will be in my name since I will be taking some loan to buy that new house. Now would the bank ask me to do downpayment from my own account? Or can I do a downpayment from my mothers cheque and still be eligible for a loan.
Or would it be better if my mother gifts me the sale proceeds for the purpose of buying a new property? In this case would both me and my mother will be exempted for capital gains.. Since she will be gifting me money which actually is the sale proceeds of the old house.

Would like your opinion on the same.
Regards

Reply

527 Rahul Sharma September 4, 2014 at 6:43 pm

You will be eligible for loan if payment will made from your account only.
Your mother has already sold house to someone. Capital gain has arise in the hand of your mother. To save this capital gain either consideration of this sold out property shoud be submitted in the capital gain bank account or purchased a new house only in the name of your mom under section 54.
If your mother will gift consideration to you, then your liabilty will be nil on the gifted consideration but capital gain will arise in the hand of your mother.

It is better to purchase new home in the name of your and your mother as a co-owner. By this, Capital gain liability will be nil in the hand of your mother subject to share ratio of new property and also you can pay downpayment from your account.

Reply

528 Manish Chauhan September 20, 2014 at 3:41 pm

I think the downpayment has to be done from your own account. Your mother can transfer the money to your account, there will be no taxation issues in this case, as its totally fine to take money from mother. But I have no idea if she can claim the capital gains tax properly !

Reply

529 Susan J September 17, 2014 at 3:53 pm

My husbands paternal uncle wants to transfer a flat that he owns to my husbands name.
What is the simplest and least expensive procedure for this transfer.
Also we have no idea of how much the whole procedure costs. Please advise.

Reply

530 Manish Chauhan September 20, 2014 at 2:11 pm

Better see a lawyer for this . He will have to make a GIFT deed and initiate the transfer

Reply

531 satya October 4, 2014 at 1:28 am

Hello Mr Manish,
If I receive amount of around 1 lakh rupees from my friend in one financial year and then repay it in the next financial year, am I supposed to pay the gift tax on it?

Reply

532 ashalanshu October 10, 2014 at 5:10 am

Dear Satya, the plain answer is NO. But to treat it as loan with out interest, you and your friend should prepare a document for the same.

Thanks

Ashal

Reply

533 Manish Chauhan October 16, 2014 at 5:07 pm

No :) .. just make sure its done via bank transfer so that the transaction is clearly visible !

Reply

534 sameer November 4, 2014 at 3:30 am

Hi!
I have invested in busiuness abroad and receivinh monthly income from my friend abroad who is looking after the business.

What if i receive the money on my moms name ? Will it be taxable after 300k tax slab for women?
If i invest the money received on my name into varoius investment vehicles can i save sone tax?
I receive 50k per month. Can this be distributed on.my name.and may mom name to save tax?
(250k and 300k tax free for me and mother).

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535 Manish Chauhan November 5, 2014 at 10:32 am

You can distribute it between yourself and mom , but the only problem is that tomm if there is income tax scrutiny , then how will you explain about this money transfer to tax inspetor ?

Manish

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536 ravikishore November 11, 2014 at 10:29 pm

Hello, I need a brief clarification on my question…
Basically i do real estate where it involves in a matter of crores, lakhs etc….if the deal was sucess and the owner is ready to pay me a sum of amount exmple – 50 lakhs…then how he wil deposit?? even it is owners wish on how he wil pay…but we know that he cant pay by hand…so max he may choose transfering option through net banking..so is it possible to transfer that much amount? and after recieving the amount,does bank people come to know that my account was filled with huge amount????do they question me??? wat about income tax??wat problems should i face and how to come out from the situations…reply me briefly in each aspect sir please ..even suggest me if anythng to say….thanks :)

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537 ashalanshu November 15, 2014 at 11:12 am

Please contact a CA, as it’s not gifting, it’s your income from your profession of property broking.

Thanks

Ashal

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538 Manish Chauhan November 17, 2014 at 10:42 am

If any amount is deposited in your bank account , even if its Rs 1 , bank knows it and even Income tax department can know it . They will know for it sure, if its above 2 lacs in one go .. and now its upto you to prove what exactly it is, income or not .

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539 ashalanshu November 15, 2014 at 11:14 am

Dear Brijesh, in simple words, you have been fooled. Should I say more?

Thanks

Ashal

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540 Ravi November 19, 2014 at 5:38 pm

hello i just want to know ,
if i book airticket worth Rs.5600 for company visit and i m raising reimbursement towards company 10000/- against same. its liable for Tax.

Thanks

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541 Manish Chauhan November 21, 2014 at 10:08 am

If you are getting excess amount, then its your income ! and yes it should be taxable !

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