Gift Tax in India – Everything you wanted to know about rules and exemptions
POSTED BY ON March 4, 2013 COMMENTS (1,036)
Do you know that, when someone 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 .
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 received (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 ccan’tprove 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 noting 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.
Greetings of the day!
I am a working professional, and the following is my situation:
1. I pay HRA to my grandfather (maternal), let’s say INR 6 lakh.
2. My grandfather (maternal) send this money to my mother’s account as a gift.
3. My father sends me the same amount (INR 6 lakh) from his bank account, i.e. both my father and mother have a different bank account, and consider it as a gift.
This way I can, indirectly get the money back that was paid for the claim of HRA. Will it be legal ? Do I have to pay any tax in this scenario?
Thanks, looking forward to your response.
You cant claim TAX DEDUCTION for full amount of HRA actually.. Most of the times its lower than HRA amount.. So how are you benefitting ?
Because you will anyways pay the tax applicable .. After that you are sending this to grand father and getting it back from father. I dont see enough benefit
Manish
Hello Sir,
I am a student and i have a hypothetical scenario that i want to clarify, suppose A’s brother/sister wants to transfer 20-30 lakhs money to A’s son/daughter who we can imagine is an adult who is an income tax payer. in that case what needs to be done and as this amount is more than 50000 does A’s child be required to pay any tax or something. Sir i am a law student and this was the question asked to me in one of our exams, i could not answer it, can you please let me know the answer to this question ?
I dont think the kids need to pay any tax in this case!
Manish
Hi,
Thank you so much for the detailed post.
I have a question and I really want you to answer it.
I am an IT professional working since 2 years and my father is in Indian Air Force he was posted to another state.
We were buying house in Delhi worth 32 lakhs, and due to covid I am working from home in Delhi (we currently live on rent) and here builder is asking for money partially in online and some in cash. So what we have decided is to transfer some amount in my bank account and I can pay him using online transaction as it was easy and I can verify details and everything as he lives here only. So my father transfer 15 lakhs to my account in small installments and I paid the builder using net banking. Is there any kind of tax related scrutiny can happen on me ?? Like so much money inflow and outflow in 2 months only…etc etc..
and Also, If we pay rest of amount in cash is it legal on our behalf ?? Because I know builder want that part in cash because he wants to evade tax but should we be worried for taking cash from our bank account ??
Thanks.
The scrutiny can surely happen as tax department just looks and numbers. But you dont have to worry much because there is no tax angle here.
You can tell them exactly what happened .. that your father just transferred it to you and you are paying it. Nothing will happen
The only thing which can happen is that they can ask your father if that money is white or not and if your father has been paying his taxes and returns properly and can justify it then there is no issue.
Also if you pay cash to builder, its again not an issue for you. Paying and taking cash is not a crime. Not paying tax on the income is crime. So its the builder issue if tax department finds about that.
Manish
Thank you Manish,
I appreciate your super fast reply.
And regarding my father paying taxes yes he is paying because in Defence services they deduct it and then give salary.
Thank you so much for the answer.
In that case you have nothing to worry as everything can be explained ..
Hi Sir,
My name is Jaek and I’m an Indian. I work for UK for past 5 years. There is no office in India and the only office is in UK. I work for them (IT professional) from India. They are sending money thru Money Gram. I receive nearly $10000.00 per year. How to pay tax? what would I do? How much should I pay tax? after they sent money through Money Gram, I will reach local finance service and then they would transfer through IMPS. Ex : IMPS transaction from xxxx finance. So, it does not show that where exactly that money would come from. it should be local finance service send an IMPS transaction. Please help me. Thank you.
There is no confusion.
Its your income in India and just pay it as per your slab.. Check with a CA if it gets complicated!
Manish
Hi Manish,
I earn 10 to 15 k Rs in share market per month and for that i am paying profit sharing with one broker company regularly.
due to every week/month transaction with those broker, is there any legal action will take place or it is all legal.
your reply is appreciated .
Nothing is illegal here .. Just that its your income so you are paying the tax on the whole thing.
Hello Sir,
I received 4lacs rupees from my father as a cheque which I invested as a NSC for 5 years. Am I required to pay any tax on amount received from my father?
No you are not. It will be treated as GIFT ! .. nothing to worry!
Hi,
I have been a regular reader of Jagoinvestor articles and highly appreciate the quality of content provided. I have one query that “if son gifts ‘x’ amount to mother and mother gifts the same ‘x’ amount to his son’s spouse, will it be illegal as son gifted to mother and mother gifted to daughter-in-law? What would be tax implications or clubbing provisions in that case?
Thanks and Regards
Yes, there will be clubbing provisions applied here..
Its clear that husband is just giving the gift indirectly to wife only to avoid taxes using the pre-text of gift rules.. This will attract gift tax!
Hi Sir,
In case a adult child receives a cash gift from a grand parent, then will the income he earns on that gift amount be clubbed with the income of the grand parent?
No, it will be the child income.. income tax clubbing will not apply
IF I GET A GIFT BY CHEQUE FROM MY REAL MARRIED SISTER, WILL I HAVE TO PAY TAX AND WHAT ARE THE FORMALITIES TO BE COMPLETED, IF ANY, FOR SUCH GIFT. IS THERE ANY LIMIT OF AMOUNT TO GET GIFT FROM REAL SISTER
No tax .. And no limit
Someone has sent me a gift as $ 45000. Someone has call from Mumbai.They are saying that I have to pay 78500 rs. registration fees. Do I really have to pay this fee or will I get this amount directly and somewhere it is not a fraud
Its a fraud !
Why have they given you this money, Why do they love you so much !
Sir, I want 70 lac money from my relatives and friends in partly for purchase of house property. They transferred the money in to my saving bank account. Will I pay the tax of same amount? Any query ask by the income tax department to me.
no tax.
its loan.. not income
Hi Manish
My mother given a cheque Rs. 10 Lakh for gift , any personal use. I need a Gift Tax laiability.?
NO tax for you !
Can i need to submit proof on that?
Hi Manish ,
My wife has given 3 l to her sister as gift which her sister has deposited in her account .My wife has got this money from saving which she does from household savings over the years from monthly money which i give her in cash .
Now her sister has received income tax notice asking about this money . Will this come under gift ?
Yes this is GIFT .. Your sister will not have to pay any tax. However tax authorities might ask your wife how did she get this money and tax is paid or not. For that you should be ready !
Hi Manish,
Does the gift amount have to be reflecting in Income Tax Filing. If so, under what header/section?
Hi Abhishesh
This query belongs to CA domain, hence we are not the right people to comment on this issue.
I suggest you get in touch with a CA for this in your city.
We also have a CA partner incase you want to explore that, Just fill in your details here and they will give you a complimentary call back
https://www.jagoinvestor.com/pro
Manish
A brother who is a citizen in US sends one lakh per month to her sister and Rs. 2 Lakhs to
his mother thru bank account. is it required to file a ITR for a mother and sister as it is a gift exempt under sec 56. if not filed, what are the consequences
Yes, they need to file the ITR. Even though tax will not be there, but ITR has to be filed and gifts needs to be mentioned!
Manish
My wife is working in abroad and sends me 50-60thousand monthly do I need to pay tax
No , its a gift
My sister’s marriage and my son’s Janoi was on 1st to 5th of February 2013. At this occasion we received big amount of cash as gift from our relatives in form of covers and chandla, can I deposit this amount in bank, is it taxable?
Yes, you can ..
Just make sure you make a list of all people and amount given by them.
I got money worth Rs.5,00,000 from my father in law in August 2015 on occasion of my marriage.I’m deposited that amount in September 2016 as fixed deposit.Is it taxable or not?How can I show this amount in my assessment.Plz reply.
Its not taxable, but the interest you earn will be taxable. You need to talk to CA on this .
Sir, I am working in private sector with annual income of 4 l per annum, for which I do pay the tax, but along with this my sister sends money Into my account twice or thrice a year(around 1.5 lacs)..I use this money to prepay my home loan and to invest In mutual funds.. do I have to pay the taxes for this gifted amount.. and also for this do I have to take any actions specifically.
No, you dont have to . It will be considered as GIFT
Hi Manish
My father sold a land for an amount and the market value is of 5 lakhs. Buyer would prefer to give it via Check.
This money is needed for my sister marriage
How could i exempt this money from tax, I heard about giving this cheque to my sister acc would relieve me from paying tax as a gift for her marriage
NO,
The amount you gift is AFTER TAX income, so when you sell the land for 5 lacs, first you need to pay applicable taxes and whatever remains can be gifted. I dont think there is any escape from this.
Hi Manish,
In July 16, I have given a cheque of 8 Lacs to My Brother as he had plan to buy some property and buy items to run his small shop . He deposited cheque in his account and withdrew Cash . However he could not use and after demonetization he wants to deposit it back to his account and give me cheque back .
Can he do that . Is there any Tax Liability on this for him or me . Also do we need to keep any documentry evidence other than the account statement . Thanx
No, he can surely do that because he can show that there was cash withdrawl of 8 lacs from account and thats being deposited back now. However this might attract the tax enquiry, but dont worry if you have not done anything wrong !
Can my father or mother give gift cheque of Rs. 1 lakh to my wife. is it taxable?
can i give interest free loan to my wife from my saving account & my huf account to invest her in bond.
It wont be taxable for wife.
Hi Manish,
What is the yearly limit of amount a friend can send it from abroad to an Indian account via online transfer.
In some articles I found up-to $14000 yearly is tax exempted.
I am not clear on this, hence cant answer this
Hi Manish,
Pls tell, the amount received during Birth of my Daughter in name of Her and myself from relatives, does it attract any Income tax , is their any limit on such amount received?
Yes, it will attract income tax.
Hello Manish……..My father gave Power of attorney to my name a month back now i am selling that property which is around 25 lakhs ……am i liable to any taxes??
Hi sonam
This query belongs to CA domain, hence we are not the right people to comment on this issue.
I suggest you get in touch with a CA for this in your city.
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Manish
Am a stock trader. . One of my NRI friends is willing to lend me 10 lakhs for my business through wired transfer. Would like to know how do we document it appropriately, as he is not the blood relative. Does FEMA affect this any way?
Hi Sathish
This query belongs to CA domain, hence we are not the right people to comment on this issue.
I suggest you get in touch with a CA for this in your city.
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Manish
We, an organization of a Local Traditional Lord, if sold a land to a schedule tribe at Rs.,75 lakhs by transferring through bank cheque. Is it taxable by the purchaser or the seller ? Please help us from your good service.
Hi T Madhob
This query belongs to CA domain, hence we are not the right people to comment on this issue.
I suggest you get in touch with a CA for this in your city.
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Manish
Hi Manish,
Am I liable to gift tax if my father’s elder brother finances me for purchasing a car.
No
My husband stays in US.. He has been transferring money to my savings account in india.. is that taxable in india? What’s the limit for transfer?
Hi pooja
This query belongs to CA domain, hence we are not the right people to comment on this issue.
I suggest you get in touch with a CA for this in your city.
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Manish
Hi Manish Chauhan,
My in-laws sold agriculture land for 10 lacks cash (old 500 & 1000 rs notes) after Nov 8, 2016 and same old note have been given to my wife.
1. Can she deposit the complete old cash in her Bank A/c?
2. Is it Taxable?
3. Can this amount be considered as gift, if it is then what is the procedure, please advise.
Surely its taxable ! .. Its income right ! . so its taxable .
Yes the amount can be considered as GIFT, but GIFT has to come after paying tax. So if taxes was not paid, it has to be paid now !
Manish,
You’ve written a informative article, thanks for your time and thanks for educating me on this.
I have few queries:
If I want to gift cash (through account) to my uncle (My Father’s own brother) is there any limit?
If I want to give hard cash as a gift is it allowed? if yes, what is the limit and procedure?
Me and My uncle if we both write the gift details in white paper and sign it will it be enough?
Thanks,
Ashok
There is no limit on the GIFT. You can give any amount. However note that it will come out of your POST TAX income, you cant save tax by giving gift !
Hi
I am OCI holding citizenship of Canada earning Interest From NRE it is not taxable in India I know but is it compulsory to file tax return in Indian Income tax return & must to show in tax return while other income is below taxable.
Hi Krishan
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Manish
Dear Manish
I have given an amount to brother of my spouse last year which i could not documented.
Please advise me what I have to do now, Can it be counted a gift to relative or what will be tax implication
Regards
Yes it can be counted as GIFT, but you cant save tax on that !
Dear Manish ,in october 2016 my grandfather gave me chq of one lac as a gift to me and 50,000 cash to me ,if i can deposit it in my account and if it is taxable
regards
Yes, you can deposit. No tax will be applicable
Hi..
My Wife Gifted Me rs 5 Lakh in the form of cash & the same Was deposited in My Business current Account..Let me know Tax Liability On Both the side & Also let me Know Can i give interest in Future For said Amount
Hi Ashish
This query belongs to CA domain, hence we are not the right people to comment on this issue.
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Manish
Hi Manish,
My sister stays in Australia and she wanted to transfer money to my account,around 30lakhs. Do i have to pay tax for this amount. This money will be for my use. For me to buy a property
Hi dsouza
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Manish
Hi Manish,
I am in USA and planning to buy a house / property in India as an investment.Can I send money to my Father/Mother/In-laws account to purchase the land/property which later I will transfer on my name/wife’s name once we will return back to India.Does the transferred money to my parents will be taxable now or in future if they will transfer the Land/Property back on my name/wife name will it be taxable during that time.
Hi sachin
This query belongs to CA domain, hence we are not the right people to comment on this issue.
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Manish
we have just been blessed with a baby and the baby has received cash gifts worth approx 65000 Rs.
of which 53000 is from my parents, dads brother n brothers wife, moms brother and sister , my brother n his wife, my wifes sister and his husband…… basically all blood relatives
rest is from friends and community
how will the tax rule apply on depositing this in the baby’s account
THere wont be any tax
Hi Manish
I am a NRI, I have given Rs. 5 lack to my spouse brother through Cheque from my NRE account.
Now he want to return it by way of cheque.
what will be the tax consequence
Nothing .. its just a give and take ..
I have created an HUF ( me wife & son). I( karta) have received Rs. 5 lac cheque from my parents . I want to deposit the same into HUF account . Will it be taxable as the amount s more than 50000?
Or
I if I route this amount through my account to HUF
Whether I have to include this amount in my tax return as you said GIVER can never save tax.
Please guide me
Hi Aman
This query belongs to CA domain, hence we are not the right people to comment on this issue.
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Manish
Hi Manish
I went though your article as well as the comments below. It was very helpful and I am amazed to see that you take the pain to answer each and every query individually. Thanks a lot. In current scenario this really helps a lot of people who does not understand the nitty-gritties of income tax.
I have a query of my own too. I have two kids aged 7 and 2. Over the years they have received cash gifts from various relatives which we never spent and the amount now is closed to 2 lacs. How can we submit this in bank. should we open separate accounts for each of them and then submit there?
Yes, I think it would be good idea to open 2 accounts and deposit 1 lac in each ..
I have became a lucky winner on my Bank’s debit card for which Bank is gifting me a LCD TV worth Rs18,000. However it is asking me to pay Rs 6000 towards gift tax. Is it correct that the Bank can ask me for such a tax as amount of gift is less than rs 50000? Is it some other tax but gift tax that the bank is asking me to pay?
Hi Gaurav
This query belongs to CA domain, hence we are not the right people to comment on this issue.
I suggest you get in touch with a CA for this in your city.
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Manish
hi manish,
My father is 69 years old. My Father retired in 2008 (9 years ago) now he has Rs.250000 on his hand. Can we deposite this money in his account and than take gift cheque his son’s account ? there any income tax occur on me and my brother’s income or gift received from my Father?
NO, there wont be any tax for you
Hi,
I am in US and I need to transfer money to my parents from my earnings here. Should my parents pay tax for this amount? Thanks.
Mostly no, but I suggest you consult a CA
Hi Manish,
I have a different query with respect to tax on Capital Gains..
My father purchased a land worth 14 lakh in year 2006. It is given for development to a Builder and got 4 flats in return during the year 2015 . Now, my father wants to sell one Flat (out of the 4) for amount 35 lakh and transfer 20 lakh to me as a gift.
I understand that I will not have to bear any tax as the gift from relative. But, my query is with respect to tax my father has to bear in this financial year.
Please suggest:
1) Will the capital gain on the property (i.e Flat) sold becomes Short Term or Long Term (as it involves the GPA given to the Builder and the Builder allotted the Flats in return, will it anyway become Short Term Capital Gain?)
2) How much will be the Capital Gain amount in this case while the other three flats continue to be in the name of my father?
3) Is investing the Capital Gain amount on the Shares save tax?
Thanks in advance,
Krishna
Hi Krishna
This query belongs to CA domain, hence we are not the right people to comment on this issue.
I suggest you get in touch with a CA for this in your city.
We also have a CA partner incase you want to explore that, Just fill in your details here and they will give you a complimentary call back
https://www.jagoinvestor.com/pro
Manish
Hi Manish,
Thanks for wonderful analysis.
Currently i am looking to buy a site in Bangalore, registering it with myself+spouse name and have below concerns
1) Broke FD which was in my Father’s name(Retired amount) & transferred to my Saving’s account. Sum of Rs.18L. Will use same money to pay land-owner. Will this be considered as Gift from relative? if YES do i need to pay Tax for same ?
2) Father-in law is planning to gift a sum of 15L via cheque to my spouse account to be paid for same property. Will this again be considered as Gift ? And if YES is it required for my spouse to pay Tax for same ?
1. Yes it will be a gift, and you wont pay tax
2. Yes, no tax again !
Congratulations !
Manish
hi manish,
my grandmother was retired before 20 years ago, now she has Rs.300000 on her hand. Can i deposite this money in her account and than take gift cheque in my account ? is there any income tax occur on my this income or gift received from my grandmother
No tax for you if she gifts it to you 🙂
sorry i forget to say that my grandmother was a government employee and she received Rs.7000 pension per month . Every month she withdraw money from the bank and keep saving…she is now 88 years old. Should i deposite 300000 amount her account and take gift cheque in my salary account? Is there any Income tax query or tax liable? please suggest sir…
Yes, you can deposit it without any issue
Hi Manish
I transferred money to my mom account. She has done Fixed deposit with that. But now I need that and I am transferring the money back to my account by breaking that fixed deposit. Amount will be around 6 lakhs. So will it be taxable to me?
Thanks in advance.
No , it will not be taxable !
Hello,
My sister got married on the 11th of this month and we received a lot of cash as gift like it is the norm in India. Problem is most of it is in old 500 and 1000 Rs notes. Will I be able to deposit them in bank and get exemption on it.
Thanks,
Karan Anand
Yes, you can ..
All gifts you get in marriage are tax free . Just keep the record of how much was received by whom and thats all is needed in explaination
Hi I, , let say ram is getting married in Dec, 2016,, and before modi’a declaration date I. e 8th Nov, ,, ram got 5 lakh cash as marriage gift, , will it be taxable. .??
No , it will not be taxes. Its tax free.
All he needs to do is make a list of people and how much gift was given to him by whom !
Dear Manish,
I have received 5 lacs cash as gift from my in-laws on birth of my son, prior to demonitisation by the govt. I will have to deposit the same in my ac before 30 dec. Can i deposit this money as gift received. What will be the tax implications on the amount deposited.
Yes you can . It will be tax free
My dad borrows money for my brother’s wedding from friends and relatives via cheques in his account.Now can he deposit the money which my brother gets in the wedding as gift in his account to pay back the creditors?? Or should the money be first deposited in my brothers account and then transfer to my dad’s account?
If they are ready to accept cash, you can pay them in cash. If not, there is no other option but to deposit in bank and then pay
The borrowed money is via cheques so would like to return also via banks. The query is that wether my dad can deposit the gift money in his account or would it be better to deposit it in my brothers account…..
Do it in the account which does not have a regular income anyways !
My marriage done on 18april the collection of gift as money 5 lakh i have not deposit in bank till now please help i have deposit to bank is taxable or nt
Gifts and money recieved on marriage is not taxable, provided you are able to prove that you got in marriage
If parents sell a house & money is invested in commercial property on son’s name. What will be the tax payable?
Parents .. They bought and sold . So tax is applicable . Where they sold is not material here as its invested in commercial and not in residential again .
Hello Manish,
If I gift Rs. 20 lakh to my friend/relative on marriage, so it will not be Taxable to them.
BUT,
Will it be taxable to me. I mean do I have to show that I have paid Tax for those Rs. 20 Lakh?
I appreciate your help.
Thanks
TJ
The money you GIFT comes out of your taxable income. So you have already paid tax and then whatever money is with you can be gifted. So note that the GIVER can never save tax.
Hi Manish ,
I take a loan from my friend who doing mba in Australia ,he sent money in my account 1,20,000 for my education ,is this amount is taxable or not. if it is then suggest how can I pay the income tax .
No, its not taxable. Its a loan which you need to repay later .. Just make sure you have documents for this .
Also you dont need to worry if total income per year is below 2.5 lacs limit
HELLO,
I got married in January 2016, in which I received gifts in cash. which I did’t deposit in bank till now. Can I deposit it now as tax free income?
Yes, you need to just mention that it was received in your marriage
i was married in 2010 can i deposit money received in marriage now
You can , but how will you justify never using the cash ? Is it practical ! . I think there is time limit to declare that cash . You cant do it years later !
Hi ,
How to document gift in cash received from my spouse’s parents(which ITR , gift deed etc to be used). Also under which header should it be entered
How many days before marriage can such amount be transferred in my account
Hi aman mishra
This query belongs to CA domain, hence we are not the right people to comment on this issue.
I suggest you get in touch with a CA for this in your city.
We also have a CA partner incase you want to explore that, Just fill in your details here and they will give you a complimentary call back
https://www.jagoinvestor.com/solutions/ca-services
Manish
hi Manish
I am leaving in thailand and i am working as a chef in Marriott international .
i want ask ? you my Father planing to Build his own house and i want help them as a gift 30 lakh rupee .
this sithuation is any problum from income tax Depatment?
or My father have to Pay Tax?
I am Tax Pyer in thailand?
Thank you in Advancve
Best Regard
Mohan
No , your father will not be paying tax as its a GIFT
Hi,
My mother brought a land in 2001 for 2laks and built a house in 2008 for 17 laks.
Now she is selling it for 55 laks.
The selling amount will be shared between mother, myself and my sister.
I will buy a house with my share.
Now, who all has to pay capital gain tax? In which way we can legally avoid it?
Hi Vinu
Thanks for your Query .
I would like to share an article from business today that will help you – http://www.businesstoday.in/moneytoday/tax/options-that-can-help-exemption-from-taxes-on-capital-gains/story/209776.html
Please clarify.. whether clubbing provisions will attract or not in case of income earned from gifted money from relative in case of major children, spouse & parents…
Hi,
If my father sells off his property and if he want to give say 30 lakhs to me. Can he just transfer it to my account, will it have any tax implications for him or for me.
Hi,
Please tell me if the gifts received from the company where I am currently working fall under gift tax or not.
Yes it does
sir,if my father give me gift in cash on by marriage & If i earned some income by investing that cash.
so tell me sir that income is clubbed in my Father’s income or not.
note: Gift is more than Rs.50,000/-& me & my father both filing our income tax return.
Since you are above 18, The income generated from the cash gifted by your father will not be clubbed with your father’s total income.It will be added to your total income.
No , it will not be clubbed, because I think you are already major !
Message
Tnks for your ans…
ans..will remain same if I am minor &gift received from my father on my birthday….
Sir,
I want to give Rs. Six lacs to my son, to purchase a car, how to give him and is there any gift deed i have to create..
You can just transfer the money to his account from your account. You dont need to do any documentation for that!
If I receive a total amount of Rs 45000 or so from my various friends on my Birthday , is it taxaable ? aa
No
Hi,
We(My mother, brother and me) sold a property and got complete money(For Example: X Lacs) in my bank account only. Now my brother is planning to buy a home on the name of my mother and brother. Now if I gift money of my part(X/3 Lacs) to my brother then will I have to pay property gain tax on X/3 lacs or that would be exempted because they are buying property.
Thanks in advance
No , it will not be exempted because YOU ARE NOT BUYING IT .
Hello
If any non relative gift me money in cr by neft … What I do in this case
Pay the tax ?
Hi,
I transfer 15000 pm to my parents as a household expense in native. Can i claim a tax benefit on the same and since there income is less than 2 lacs they will get tax benefit as well. What kind of documentation can I submit ? Also i have filed the returns, is it possible to amend the same now ?
No , you cant claim it like this. Its your personal expense
Hi,I have a question…If I invest 1.5 lacs in senior citizen savings scheme in my parent’s name,can she claim tax benefit of 80c for that??Suppose her total income from other sources are 3 lacs per annum.Please explain.
No , only the person who has invested can claim the tax benefit
Then if I gift 150000 to my mom and she invests that in senior citizen savings scheme,can my mom claim tax benefit under 80c by this investment then???What happens if I invest the same amount in her ppf account??Then can she claim tax benefit under 80c???
Yes, then she will be able to claim the tax benefit because she is investing it from her own account.
If you invest on her name, even then you or her cant claim tax benefit.
Question put by shreematri@yahoo.in
I give gift out of my salary income (after tax) to my widow senior citizen mother (housewife) every month for last 4 years since I lost my
father. It is not for an ocassion but out of my love and for her security I gift her. However I do not have a real documentation or notarized
document.
I was under the impression this is tax free but now I am worried since the ITO can always tax my mother as credits received form me
liable to tax.
Maybe I have mis-interpreted but I am worried since the money gifted by me is out of my income which is already tax and paid via
netbanking channels.
I request your inputs to clarify my doubt of if I need to create any documentation retrospectively just for satisfaction of the ITO.
And how can I really follow the statute that I have made a gift to my mother. Is there any document which I can make now. Please guide.
Thank you.
No , it will not be taxable for your mother as its a gift from you. Dont worry !
Dear Manish, Thanks for very good information.
kindly provide your mobile number so that I can contact you.
What is it regarding ?
Hi ,
If my father gifts Rs 5,00,000 to me and then I gift that amount to my father in law to pay off his home loan, will it be taxable in any case.
Yes, because though its not DIRECT transfer, its indirect ! . Its not allowed that way
I am a house wife. Can my husband gift 50000/- per month to my retired parents for their livelihood, without any tax implications on him? Can my parents invest the money for interest returns without paying tax?
He can do it in a smart way. What he can do is give 25k to each parent . That way the income would be within the taxable limit
sir, if i am giving Rs 200000 loan to my wife and she invests this amount in FD and not under TAX slab, housewife, who will pay the tax on interest from FD. ME or My wife.
It does not matter which tax slab she comes, here all the interest will be added to your income and then taxed as per slab
Hi Manish
Request you to share, if I get a gift of 1 lakh from my father and invest it in FD, do I have to pay taxes on the the interest accumulated?
Thanks
Yes, any investments you do from the received money will be taxed.
Good Morning sir !
1. My mother (widow- Age 75 years) is a family pension holder after the death of my father.
2. Income from Annual Pension is 2.16 Lakhs
3.A land was acquired by her during 1995.
4. She sold the agricultural land in 2014 for Rs. 21.5 Lakhs for which she received the payments in installments.
5. She received 7.5 Lakhs in 2014-15.
6. balance amount of Rs.14 Lakhs was received in 2015-16.
7. She gave me gift of 12.73 Lakhs in the year 2015-16 towards purchase of flat by me. The amount was directly credited to the builders account.
Now
8. I understand that I need not pay any taxes being a gift from her
Q1. Do she need to file income tax for the AY 2015-16 ?
Q2. If so then in Which ITR ?
Q2. How could she obtain exemption on tax ?
– regards
Please ask brief and short questions.
how are donations received from foreign nations taxed? i started a gofundme crowdfunding campaign for financing my higher education, the campaign is about to reach its goal, is the money i will receive taxable? does it fall under the sources from other income rule? how do i declare this income? would i be taxed if the amount is less than Rs. 50,000?
Hi anonymous
This query belongs to CA domain, hence we are not the right people to comment on this issue.
I suggest you get in touch with a CA for this in your city.
We also have a CA partner incase you want to explore that, Just fill in your details here and they will give you a complimentary call back
https://www.jagoinvestor.com/solutions/ca-services
Manish
I am salaried employee from my savings account I have done some fixed deposits in the banks and earned 40 K as a interest on the accounts. Those banks were deducted 10% TDS on the FDS. My company also has deducted tax money according to my slab. Now the questions while filing returns If I include the 40k as “income from other sources” the tax calculation in efiling shows the extra 4K. Do I need to pay the amount or is there any possible to get the exception on it as 10% was already deducted by the banks. Kindly give me the suggestion.
Hi
You have to add interest income to salaries and calculate the tax on total income . Out of the tax TDS deducted on salaries and interest can be deducted.
You need to pay the taxes, but as 4k is already deducted from banks, then you dont need to because its already paid
Hi,
I had purchased a 1 bhk before marriage. Post marriage along with my wife we took a 2 bhk and she is the first owner and i am the 2nd owner. Now she is not working
I want to gift the 1 bhk rent to her directly.
Will this rent amt be taxable for me. (90K pa.)
also she did not invest this further all used to do shopping…. still will this be taxable for me or her.
If the house is in her name, then the rent will be her income !
1 bhk is in my name
2 bhk we both are the owners (she is the first owner and I am the 2nd owner)
1 bhk which is in my name. I want to gift her the rent. Will the tax be borned by me or my wife.
You cant gift the rent like this . It will be treated as your income only. Only on the 2 bhk , rent she can claim under her name as the house is in her name.
If you want, you can gift the 1 bhk to her and then any rent which will come will be her rent.
A person wants to tranfer his fixed deposit of 16 lacs to his niece . What is the income tax implication ?
Check this https://www.quora.com/Can-an-existing-fixed-deposit-be-transferred-or-gifted-to-another-person-prior-to-maturity-in-India-What-taxes-would-the-beneficiary-to-pay
I WA.NT TO GIFT 30 LAKH TO MY SON FOR BUYING A HOUSE HOW TO MAKE THIS PAYMENT WITH OUT INVITING TROUBLES FROM INCOME TAX DEPT. ?
You can make the payment using Bank transfer or cheque ! , but not CASH !
HI
Is there any option to get exempted from giving gift by filing returns.
No
Hi…really good and detailed article..just have one question : I have transferred/gifted nearly 20 lacs to my mother in this past year…from this article it is clear that she needn’t pay any tax on this…however, what is not clear is : if she should disclose anywhere about this, like in her IT returns ? If yes, then in what section of the IT returns and in which form…my mom is a housewife and her only source of income is interest earned on FDs (less than 2 lacs per year)…
Thats more of a tax return related question. She should check this with a qualified CA !
is gift deed is mandatory
No
Thank for reply…
is any reference of any section or law.
hi manish, just want to know that if i borrow rs 70 lakhs from my friend to buy house plus may be a commercial property, he is not a relative, but a close friend, I intend returning him the money back via monthly installments say rs 30,000/- month from my salary for 20 years…do i have to pay some kind of tax..if yes how much and by when, so that i dont get any notice from IT. Secondly to do this kind of a private deal with my friend do i have to do any formal deal/affidavit or something?
No tax is to be paid on this, as this is a loan amount. Take help of a good CA on this so that you are protected for future.
My friend received Rs 10000 from 120 friends (all are online transaction total 12 lakhs) to conduct college alumni get together program.Does he liable to pay tax.he is going to spend for the get together next month.How he can avoid paying tax since they all not his earned money.Any documentation needed for this
Just ask him to make sure the expenses are also done via banking channel, so that he can show income and expenses both with receipts. No documentation is required though.
If my father(pensioner),Mother(Pensioner)& my wife (Working and files IT return every year transfer some amount of money to my account every month to help me early repayment of my House building loan will that be taxable. Documentation required. My wife is also a co applicant in this housing loan but the IT benefit is taken in my file. Anything wrong?
THe IT benefits can be taken by the person on whose name the house is there and who is paying the EMI from their own account, otherwise its wrong !
Hi
I’m receiving 50k every month in my current account from my sisters saving bank account which I’m using to invest in my business.
Is this income considered as a gift or do I need to pay any taxes on the same?
The money is just going as an investment for now and no profit is earned on the same.
Thanks
I suggest taking help of a CA on this and show this money as LOAN . Incase you want to connect with a CA we trust, you can fill up this form
https://www.jagoinvestor.com/solutions/ca-services
Manish
Hi manish,
My wife will be receiving 10 lacs from her dad for buying house. Will it attract tax on it. Does any formal documentation needs to be done for this.
If she is getting cash in her account with cheque or netbanking, then anyways you have proper record for transaction. No other documentation is required. There wont be any tax to be paid by wife in this case.
i want to gift 30 lakh to my son to buy a house How to make the transaction with out inviting troubles from income tax deptt. ?
You can either give this money in cash or through banking channels.
If you give it in CASH, then your son will have to pay the tax on that, because there wont be any proof that it came from you.
If you give it through bank, then your son will not face any tax issue, but then have you paid the taxation and accumulated this wealth in white? Because there might an enquiry for you ?
Manish
You should not write this it is not allowed as per code of ethics”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.”
But I am not a CA. How does this ethics apply to me as a blogger?
Also this is a courtesy message as recognition from my end
Manish
Need to understand few things :
One of my friend is asking me to pay his Credit Card bill every 2nd or 3rd Month. And he transfers that amount back to my saving account within days no issues. My only concern is, that he can face issues once or twice with the bank’s website but not everytime I belive. It has become a routine now. Want to understand is there any sort of tax applicable on these type of transactions for me or he is saving some money by evading any taxes. Thanks
He can just deposit a cheque in the drop box if his online is not working. It could also be that he gets a reminder email / sms just a few days prior to due date, and being lazy he asks you to pay online and then he wires the money to you. My suggestion to you is (1) Every time he asks you to pay his bill, ask him to send you an email , as that becomes documentary evidence that you paid on his request (2) Ask him to pay you back in cash, not cheque or online.
I dont suggest this thing . If there is any tax scrutiny later, it will be hell lot of work for you to explain the tax inspector that the amount deposited in your account was not your income, but the money returned by your friend!
If my father’s brother’s wife (chachi) gift me money than it will be taxable or not?
no taxable
Yes it will be if its above Rs 50,000
can we gift directly the FD/NSC if yes how please explain.
if I am getting lottlery of 2 lac rupees. how much tax I should pay on this Gift ???
I will be added to your income and taxed as per slab !
what if i am earning 10 000 per week in an business. How much tax should i pay
That amounts to 5.2 lacs a year, if you have any other income , add that to this, and then pay income tax on the whole amount as per the tax slab !
My wife has received Rs.500000/- from my father. Now She wants to gift her mother in low Rs. 400000/- on her birth day. What will be the tax liability.
No tax liability !
Hi,
When I was NRI (also my wife), I gifted some money to my wife and she invested that amount to bank FD. Please let me know, as now we both returned to India and my wife is house wife only will the interest from my wife’s FD will be clubbed to my income or not?
Hi Sunil
I dont think so , because when you transferred money to you wife, you were not in India , hence the indian tax rules should not apply to you . This is my guess. Not very sure, please check with a CA on this to be sure about this.
Manish
I am from poor family have rhree young sister mother is old and father going fpr treatmenttreatment we from mumbai
So whats the question !
Hi , My father died before 12 years and had given cash of 11 Lac to me, however I have deposited that cash before 3 years in the Bank (saving account). However now Income Tax notice has came to me now to give reason for depositing this much money in saving account and to give proof however the money which my father had given was hard core cash and I do not have proof . What will be the treatment of this ?
U need to pay tax on this
Hi, Very helpful article. just wondering if my mum (Indian)gifts my wife (NRI) some money, would she have to pay tax on that. Again the amount could be more than 50 lacs.
No , she wont have to pay any tax in India, but what happens in the country you are residing you will have to check that
HOW CAN I GIVE TAX FREE GIFT TO MY BLOOD RELATIVES
You just transfer it to them. They wont have to pay tax on that.
Hey…nice article. Quick question. How about if I am a NRI and want to send some money to my parents to buy a house?
Will they have to worry about taxation on the received funds?
The amount could be more than 50lacs. Thanks
No , they wont have to worry on that !
i bought gold of 90000 /-rupees from my friend how shoukd i regularise it
Hi rajesh
I am not clear on what is your question. Please repeat it with more clarity
Manish
Hello, my father sold his house last week and is going to buy another one next week. So exempted from capital gain tax. Now he wants to gift it to me. Is there any tax he has to pay for that?
If he buys the new house giving my name only, then does he have to pay capital gain tax?
No , I think still there wont be any tax angle. Better talk to a CA once on this !
Hi Manish,
It is very good article. thanks. my doubt if any person is getting 5000 or 2000 smaller kind of amounts in a year from relatives and in total 1 to 2 lac. All are smaller amounts only.
1. Do we have to track this all those things?
2. if Income tax checks, will they agree we got gifts of smaller amounts and in total 1 lac every year without showing any documentation.
Thanks,
Venkat
Yes you need to track all this and keep in mind while paying tax
Hi
Query 1. How many times in a financial year can i gift?
For example: Can i gift my mother x amount per month and get an recurring deposit in her name.
Query 2. Interest earned on the above mentioned recurring deposit will not be clubbed with my income.
This interest earned will be income of my mother?
1. You can gift any number of times
2. Yes, thats correct !
My mother have a property and she is about to sell the same. She plan to give share to 3 of her children and keep something for her. She would like to know how to give this to her children without getting taxed or very less taxed. Each children might invest in properties. The current property is in her name and she didn’t want to write a will document mentioning share to her children, as it complicates the sale of the property. Property is in chennai.
Your suggessions required.
Better to talk to a good lawyer on this
My sibling and I are receiving shares from a relative that were part of our inheritance that we were able to obtain after a settlement (the relatives had forged wills, etc. and hidden our assets). We are finally getting the shares. Is there inheritance tax on it? What if my relative insists that it be given as a gift? Is it taxable then?
There wont be any inheritance tax
Thank you manish. How do I prove inheritance?
Any legal document should be enough !
Hi, I have couple of questions regarding reinvestment and gift tax.
My mother sold a property for 39 lacs in May’15. The cheque was deposited in her savings account.
How much time do we have to reinvest this amount?
In case it has to be deposited in Capital gain account then what is the last date, is it 31st Mar or 31st Jul?
Can she gift/give this money to me so that I can repay my existing home loan of 27 lacs? What are the tax implications?
Thanks in advance.
She has time till next 2 yrs , but if she is not using that money in this financial year, then it has to be moved to capital gains account !
Thanks for your reply. What is the last date for moving this to capital gains account. Is it 31st Mar to 31st Jul i.e. last date of filing the return.
You are requested to answer my third question as well.
I am not very clear on that
Sir. I have purchased a house (Apartments type) in 2008 September for 15 lakhs and sold the property in 2013 May for 27 lakhs. But in the sale deed it has been shown only 15 lacs. and i have received balance amount by DD to my savings account. Also please note that the house was jointly purchased by me and my spouse. I have made FD deposit for the balance 19 lacs as joint account in my name and my wife name. But i have not shown the property sale in the Income tax return. Will i Get any notice from IT ? please reply
If you have not paid the full tax which IT department deserves, then surely there is a potential for getting a notice !
Thanks you sir for your kind reply. Can i show my property sold details in the current year IT submission ? for the year 2013 or can i wait for the Notice from IT and act accordingly
Hi Sridhar, I suggest taking a CA help on this ..
Hi Manish,
What a wonderful article. I am feeling worried for not seeing your article from all these years. They way you presented is awesome.
I have a query. I am earning yearly 11 lakhs. After our weeding my father-in-law gave a land property and i asked him to sold it and give money to me. He done it 2 years back and deposited my in parts to my account. Some one money he deposited in my wifes account[Joint account of my wife and father-in-laws]. We withdraws that money from ATMs. Some he deposited in his son account and he transferred the same to me. All this Money is marriage gift fro me and my wife.
1. Out of all these money. I made 2 FDs on my 2 Accounts. Lets say 1L in each account. Will the interest earned is taxable for me?
2. These FDs are going to close by MAY. Can I give this money to my wife and ask her to do FD for next year. Will interest earn are taxable? As this is a gift for both I want FDs on her name.
3. This April he is going to give another 2L. I asked him to deposit in my wifes account only directly. SO that now my have 4L FDs . Will all this are tab free? As she is not earning any money.
1. Once you have got the money, that time it was not taxable, but in future when you earn the interest on it , it will be taxable in your hands only
2. Still the FD interest will be taxable
3. If the interest income is not upto the taxable limit, then it would be tax free. So I think its better you do FD in your spouse name itself
Thanks for the quick replay.
Fot point 2: So If I show interest earned in next year IT returns that is enough right. Thanks.
If I gift same money after FD completes to my mom and I do FD on her name means no tax right? Buy my father is still working as a govt employee. Is that fine?
Yes, looks fine
Thanks for your time.
Hi Manish,
I transfer 1.5L to my mother and opened a PPF acct on her name in Oct-2015. Below are are my questions:
a. From the above note, she doesn;t need to add that 1.5L as her income ? correct ?
b. Can she get tax benefit under section 80C, even though amt is transferred from me ?
Cheers,
Raghavan
1. Yes
2. Yes
Thanks a lot Manish, for your quick response.
One more question: as PPF has no tax on withdrawal, my mother need not pay any tax when withdraw after 15 yrs (even though source of PPF deposit is from me every year), right ?
Cheers,
Raghavan
Yes, you are correct Raghavan
Thanks a lot Manish, great help..
CAN SON GIFT TO HIS FATHER ANY SUM OF AMOUNT.?
Yes
Hi Manish,
Continuing to this, I am paying 15k to my father every month who is a sr citizen now. in what scenarios can I get tax benefit on this? Can i declare this money as a gift given to my father and get tax exemption? Please advise.
Giver can never get any tax benefit !
Dear Manish,
I transferred more than 10L to my son for his college expenses etc recently. Does he need to file tax return and mention the non taxable gifted amount. If he fail to do that will he get scrutiny from IT dept. I am salaried person, part of the money is transferred from my account and part from my wife’s account (she is not working). I keep transferring some money to her account sometimes.
Sir,
If one of my friend send me a gift from abroad worth Rupees two Lac than how much tax I have to pay in what rate.
It will be added to your income and as per slab you will pay the tax
Sir, I had inherieted a land which has been acquired by govt. and I am being paid the compensation amount with TDS. Is this amount taxable as I had inherited the land ? Please reply.S
Not because you have inherited, but because now the money is paid to you. Yes its taxable
dear sir,sorry to disturb u.my friend expired leaving 11 lakhs in fdr in bank ,my name is mentioned as nominee
I do not want to keep the amount and hence have called his wife from abroad to claim,she insists me to claim and hand over the amount to her,pl guide me the procedure ,i am a pensioner of 70 year old and do not file even the returns m,
There should not be any issue even if you claim it. You can claim and take the money and later transfer it to wife!
Hi – thanks for this helpful article. I want to know whether it is necessary to make the repayment in the same assessment year. For eg: I took an amount of Rs1,00,000 from my friend for doing some interior in November 2015. Is it mandatory that I pay him back by this assessment year i.e. by 31 March 2016 to not consider it as a gift? Or is it fine if I pay it in the nest assessment year as well? If I repay him after 31 March 2016, should it be considered as gift and should I need to pay tax on that? Please confirm.
No its not like that. YOu can make the payment later also in next financial year !
Hi Sir,
I have won 2 gifts in a contest held by a bank. One is a Car(Costs around 3.6 Lacs) and the other one is an LED TV (Costs around 30K).
They advised me to pay tax for both the gifts. Should I pay tax for LED TV as the cost is less than 50K. Please advice me on this.
What matters is the total gift amount in a year, not individual price !
If my uncle’s sons ( father’s brothers ) , including me gift or tranfer ancestor immovable property in the name of my daughter , what will be tax implications for my daughter.
Please suggest
Thanks..
No tax
Thanks Manish, but other than me are not lineal descendants ? Request you to clarify.
IN that case you are the only legal heir !
Thanks Manish
Sir,
I sold my Agriculture Land for Rs.12,40,000/- and gifted the same amount to my mother on her 60th birthday.
She invested the same in purchase of agriculture land.
In the above case as iam gifting the amount will i be Exempted under section 54B
Hi HARISH
A CA is more qualified to answer you query, hence I suggest better get in touch one.
We are not right people to talk on this
Manish
a friend of mine wants to gift me home value around 70,000.
is it then taxable to me..???
Yes
Hi,
I want to save tax, say 50000, will i be able to save it by gifting to a relative . If i gift 50K , will i save tax on full 50K or some percent.
No you cant. The giver can never save tax !
Dear Shri. Manish Chauhan,
My brother is transferring a plot with stamp value of Rs.18 Lakh to me (his own sister) as Gift. The plot will be registered now in my name. Will i have to show this in my IT return or pay any tax for this? For gifting, will my brother have to pay any Tax?
Regards,
Sundari
No one has to pay any tax here !
HI Manish
first of all let me congratulate you on the wonderful effort put forth and the great helping hand you are proving to be for people like us!
I have a simple enough question: – Both me and my wife are NRIs based in London. If I were to gift a flat (currently purely in my name; with my wife as the registered nominee); to my wife – with no money being exchanged whatsoever; I wouldnt presume it would lead to either of us being taxed in any way. – is that assumption correct?
regards
Adarsh
Yes, from what I understand, it wont .. But I strongly feel you should connect with a good CA on this matter and take thier advice
Sir, Kindly give reply to my two Queries :
1st : Can my married sister gift a land purchased value about 7 lakh to my wife ? Is it comes under Gift rule in India ?
2nd : After my sister’s marriage, I have given many times money as Gift. Now, Can my sister gift a land to my wife ? Is it allowed under Gift law ?
Thanq in anticipation. sunil
Yes, she can gift it, its a close relation and will be alllowed
hi manish,
a foreign friend of mine wants to buy me a 5-10cr house in mumbai, he is not my relative and not a person of indian origin. how can we buy the house? and if he wants to transfer money to me, how can he transfer 5crs to me.
what is the procedure and what tax will be applicable if any !
please respond asap !
Hi Mrinmoy
A CA is more qualified to answer you query, hence I suggest better get in touch one.
We are not right people to talk on this
Manish
Hi Manish,
Please clarify me on tax implication on the below scenario,
If my friend in foreign country do some business, gets some profit and pay tax in that country and if he sends that money back to my Indian account as gift and I will pay gift tax in India.
Is everything will be ok if I pay tax completely for the gift amount received?
Yes
DEAR SIR, I WANT TO PURCHASE HOUSE AND FOR THAT MY BROTHER IN LAW CAN GIVE ME GIFT OF SOME AMOUNT IN CHEQUE? AND THAT AMOUNT IS TAXABLE?
Gift received less then Rs. 50000., this is showing is income tax return or not & if showing then under which head
My real Mausi (Mother’s sister) wants to gift some money to my wife, will it be taxable ?
I do understand from blog conversation that if my wife invests that money, then she has to pay tax on gains.
Thanks a lot
No , I think there wont be any tax
Hi,
My mother wants to transfer some amount to my sister for her daughter’s (grand daughter) marriage as a gift. How can it be done? What are the requirements? She will probably gift it through a cheque to my sister.
Yes, cheque payment is fine ! .. There wont be any issues !
How to show amount of Rs 45,000/- in my income tax return, which I gave to my parents as a gift on their marriage anniversary? Should I need to create some kind of document for this and attached as a proof with ITR to get tax benefit? Up to which limit I can avail the tax benefit by gifting money to my parents?
Nitesh
You cant avail any benefit by “giving” gift.
Hi,
If one sister(A) gives a gift to other sister(B), cheque exceeding Rs 1,000,000. then as per income tax rule, sister B will not have to pay tax. however is there is any rule or liability for sister A who is gifting that amount from her existing fixed deposits ?
Dose sister A has to pay any tax for the gifted amount, other than interest received on that FD for the particular financial year?
Gopal
Any tax given is out of the post tax income. So giver never gets any benefit
Dear Mr Manish
If I recieved gift Rs 200000-300000 in 2015-2016 by cheque from my father in law and Is it taxable
Or if I invest this amount in fd its interst taxable to me ?
No , it wont be taxable for you
Hello Manish,
Can I gift cash to my Brother in Law (wife’s brother) for buying a house or it is better that I gift it to my wife and then give it to her brother. Appreciate your valuable advise.
Sahil
Yea, its better to give it to your wife and let her pass on to her brother.
Thanks, how about if I gift it thru joint account with my wife via net banking. It should still be tax free for my wife’s brother ? Is my understanding correct
Yes
I have a gift deed registered in my name, by my father in October 2015.
Should I submit it at time of investment proof declaration for income tax for the year 2015- 2016. Or should have to submit it anywhere?
You dont need to submit any document while filing returns. Just keep it for your own records !
Dear Mr. Manish , must say you are doing excellent contribution to the society. amazed by your patience to answer everyone with details. I have two concern to share with you and take your suggestion
1. I am transferring (thru netbanking ) every month 50 K to my wife for her expenses which includes household monthly expenses, She is saving from that and doing recurring pf 25K . being home maker she does not have other income. she gave 15G at bank. Can she legally do this?
2. can I also gift her 3- 4 lacs ( in form of netbanking – 1 lac per transaction ) may be 3-4 times in a year . Then she does FD of that amount. The money that I transferred ( thru netbanking ) , that was already taxed on me so I suppose I shall not be taxed again. Pl correct me if I am wrong. what happened if she does FD on those amount and interest is not taxed because 15G is submitted. is it lagal.
Thanks in advance.
1. Yes she can do that. However that money is actually coming from you. So tax liability is on you if any income is there
2. The income from FD Is taxable . Form 15G only helps you to not get TDS deducted. Thats all . It means dont deduct any taxes right away from the income, I will deposit it later.
Thanks Mr. Manish. My wife also do private coaching at home , remuneration which she get is mostly cash and we spend that for different monthly expenses and in tern I transfer from my account . Still her income from FD’s will be taxable on my head ?
NO , if its her income, then only she is liable to pay tax on it !
I have paid a big amount to my father and he has invested in RD with bank. Shall its income be taxable in my hands or with my father?
It will be taxable to your father . Not for you
If my father gifts me Rs. 5 lacs for purchase of a car, will it be taxable from my end?
No , it will be not
Hi
In whose a/c rental income of the property be calculated if the property is gifted (by paying the required stamp duty) to son by parents or vice versa
Once its gifted, then it becomes son property.
I gifted some money to my wife and she put that in a FD. In my ITR I have to show the interest in Income from other sources. Is there any need for my wife to declare this money ?. Under which exemption head she has to do this in case it is needed
No, she does not have to do that
Dear Manish Sir,
My father has gifted me a car worth Rs.7 laks on the occasion of my marriage.
The purchase was made on the basis of EMIs and he is paying the EMI amount
Through his bank account. The car is registered in my name.
My query is whether the gift document be made on a simple plain paper or does it need
be done on a stamp paper with notary.
Pls help me in this regard. Thank u.
If the payments are done online and you have that on records (bank statement) then you dont need to do all those documentations
Dear Manish,
My grand parents inherited old family jewels. Which we converted the jewels to cash. Now they want gift me the amount. How can enter it in my book of accounts .. I am having an proprietary concern..thanks in advance.
Hi Dineshkumar
A CA is more qualified to answer you query, hence I suggest better get in touch one.
We are not right people to talk on this
Manish
My wife brother and sister wants to give 5.0 Laks each to her, she is only house wife only. whether this amount will attract any income tax ? is so how much I have to pay the tax> please anguide me.
NO, she wont have to pay any tax on that money on recieving .
Sir, I am NRI my whom is living in india received a letter of IT office which details are FY 2012-13 Information Code – CIB-410 Information Description _ Deposit in cash affregating Rs 2,00,000/- or more with a banking company and FY 2012-13 TDS-194A and asked my wife to file income tax return for 2013-14. she never filed income tax return before as she doesnot work she is hiusewife and had Fixed deposites in different banks about 35 lacs which I have given her from time to time, for last 18 years of our marriage I need your help what to do further
Hi satvinder
A CA is more qualified to answer you query, hence I suggest better get in touch one.
We are not right people to talk on this
Manish
Dear Sir,
I have 17 year old daughter. My father in law wants to give her some amount (Rs 5.00 lac) for her higher education. His source of income is pension. I would like to know if he can give her this amount and do we have to pay income tax on this amount. Please clarify. If possible please reply in my email address.
thansks with regds,
Virendra
No you dont have to pay any income tax on the amount received. Its a valid gift channel ..
I want to give a cheque of 1.25 cr to my real brother can I give him, will my brother would be taxed on this amount further he wants to invest this money in for or some property, then this 1.25 cr would be taxed or the interest or capital gain would be taxed. Thanks for reply in advance
It will not be taxed to him on recieving the money. ONce he used that money, and makes any gains, taxation will come at that point of time
Manish
Hi Manish,
I’m buying a property in Pune in which my father is helping me with 10 lacs. Do I need to pay gift tax, If yes then could you please help me with the process and also could you please let me know how to save tax on this.
Thanks,
Yogesh
My father wants to invest 15L+ amount on my kids name (age 6months) in PPF, NSC & Mutual Funds.
Can you briefly explain the process and taxation view.
Would it be taxable if he invests on my name?
Thanks.
There wont be any taxation angle here .. because your father is allowed to invest in your kids name .. its like a gift
Hi Manish – if my wife gifts a car (value > 50k) to my father, will it be taxable for him?
thanks and appreciate the help!
No
thank you much Manish!
My son went for studies in US and after completting the studies started working as internship and now he wants to send some money to India. 1. what is the source of sending the money. 2. whether the money will be taxable in India on receipt. 3. whether he gives as gift to parents then what documents required
No it wont be taxable in your hands and no documentation is to be done
What will be tax implication on gift in case both husband and wife are employed and they give money to each other. Pl. also clarify whether there will be clubbing of income of the two,
THe person having higher tax bracket should pay the tax
i) In case of working spouse, if I gift him/her money by account transfer to buy tax free bonds, will it be taxable to any of the two. Moreover, the interest income on bonds is tax free being the tax free bonds.
2) Your attention is drawn to point no. 2 under head Important. Pl. clarify, will there be tax implication of clubbing of income in case both husband and wife are employed.
1. It would be taxable for the person who gave the gift
I purchased a car costing Rs.4 lacs in Nov 2012 in my name. Now the present value of car is Rs. 3lacs. I want to gift the same to my father and transfer its title in my father’s name. Please advise whether there will be any tax liability in the hands of my father
Thank you
Hi TraptiBatra
A CA is more qualified to answer you query, hence I suggest better get in touch one.
We are not right people to talk on this
Manish
Hi
I want to donate one my plot(land) to my brother.
1)When I donate the land what is the land value I need to add in the stamp paper while registration? Do I need to show the market value of the land?
2)After I made the donation if he sells it for X amount who will pay the tax for the profit he made?
3)Will that profit he makes be considered for income tax clubing to my account?
Please advise. Thank you
Hi Manimaran
Your cases is a bit complex and I think we are not the right people to comment on it.
My suggestion would be hire someone who is professional in this area and consult them
Manish
Dear Manish,
My father has expired one year back and has left one house in Indore to my younger brother and myself. My brother wants to retail the house and I have decide to relenquish my right on the house for a consideration of Rs 40.0 lakhs.
To save taxes, can my brother gift 30 lakhs to me or my daughter without attracting any taxes. (rs 10 L in cash)
Is there any other way to save taxes ?
Kindly reply urgently,
regards,
Hemant Mishrra
Yes, gifting can be done and it will not be considered as SALE , But when you guys sell, at that time the income tax will come into picture !
I suggest consulting a good property lawyer on this point
Manish
Dear Manish,
Please help me with this.
We 4 bachelors share a flat and my credit card. All of our room mates transfer money to my bank account to handle rent and credit card bill. My income is around 10Lakhs and the amount my rooms has transferred is around 4Lakhs. I have no proofs other than excel sheets of monthly expenses.
Are those excel sheets good enough to show that the extra 4Lakhs is not my income?
What extra do i need document?
Thanks!
Vijay.
You should stop this immediately 🙂
Better take cash from them and use it for your expenses. While till now whatever you have done should not create much issue. You can explain this to tax inspector , but I suggest you stop doing it from now onwards !
is it necessary to include the gift received from Son(say) in Father’s Income Tax Return as ‘ Other Non Taxable Income’
YOu dont need to mention is as income at all
My wife wanted to gift rs.10,00000 to my son as a gift in the form of Fixed Deposit.There is any tax relief.
Tax will be there on the Interest received from the FD.
No
if i want to gift to my FIL for some stuff… is there a tax on this? this will be over 50K Rs
No tax on the same. But you have to pay tax if any interest received from the amount transferred by you.
No , no tax for him
Dear Manish,
If an uncle, a resident of India, is the beneficiary of a family trust fund set up by his brothers son, ie his nephew, in the U.S., what are the tax implications here for him, the beneficiary? I believe nephew to uncle does not constitute being a relative?
Hi Ss
Your cases is a bit complex and I think we are not the right people to comment on it.
My suggestion would be hire someone who is professional in this area and consult them
Manish
Nice Article Manish!!
I have one quick question. Currently I am in US and have one property in India which i am not able to manage any more so was planning to gift it to my brother. I am not drawing any India salary and current property is on rent so filing rental income as the only income source which turns out to be zero tax filing. When I gift it to my brother will there be any tax consequences to me or my brother. My brother is employed in India and files income tax returns regularly. And do I need to do any documentation for this gift to my brother.
Yes, you will have to do the documentation , but a CA will be able to help you in detial
I want to gift Rs6,00,000/- to my son for purchase of a flat. Whether I have to pay income tax or gift tax on it. I am a retired person drawing pension of Rs26000/- per month. I am showing the interest received on the deposits in my income. Please clarify.
No , you dont have to pay any tax on it . You can safely go ahead and gift it
My mother sends me money for household expenses.. will that be taxable??
No
Father can gift amount more than 50000/- to his son’s HUF account for birthday and anniversary of karta and members of HUF ? What is tax liabilities ?
Thanks
Manish,
This is an excellent article.
Please help on this one.
My wife’s Maushi expired and she had a FD where she had my wife’s name as a nominee. Now when my wife gets this money, does she has to pay tax on this amount received ?
My wife is employed and comes under 30% tax slab.
Thanks in advance for your time,
Rajiv.
Yes, she will have to pay tax on it !
Dear Manish,
I have 2 questions
1. If one has received gifts which are below the taxable limit of 50,000/- OR tax free eligible gifts (like from lineal relations), do we need to include them while filing our Annual Income Tax returns or just recording them in our Capital Account statements is just fine.
2. If I have gifted certains sums of money on certain dates to my brother/mother/father WITHOUT NEFT or cheque etc. but in Cash, and we have recorded the entries in our respective capital account statements, is this ok? Or would those transactions have necessarily been done using Cheque/DD/NEFT/RTGS etc.?
1. Just maintaining records is fine
2. Just that, if you have done it via cash, its become a bit tough to prove !
Thank You so much for responding back, Manishji.
Hi Manish ji,
I am planning to buy a house.My father is a retired government servant. He is contributing around 25Lacks for the actual amount of 46L. Will it be taxable to me.
with regards
No , it wont be taxable for you !
My Uncle is going to settle around 80 lakh INR to my Mom for complete ownership of all the ancestral properties. He is planning to give 40 Lakhs (as settling amount towards forgiving the property) by DD and he is planning to give us the remaining amount as gift. PLease let me know if mom will have to pay any tax towards this amount . She is a home maker and hence I guess that the interest gained from the FD of this amount also won’t be taxable if it is below 5 lakhs. Please clarify.
Yes Ram
The 40 lacs wont be taxable, and interest income on it will not be taxable upto 2.5 lacs (income tax exemption limit)
Hi Manish,
I gave my friend 2,00,000 rupees through net banking and he promised me give in few months. Is this amount taxable to me when he returns the money. Also if he gives the money back next yea,r will this cause any tax issues?
Thanks,
Manoj
No , if it can be clearly established that its a give and take transaction .
Dear manish sir
Can I take 5 to 10 lac as loam from my friend through cash or bank transfer with proper documentation. Will it be tax free
No , it wont be
I am earning and my father also has taxable income and mother is housewife with no source of income.
Now suppose if i give some money to my mother and she makes FD from that money, then will the interest income from that FD be clubbed with my father income while computing tax or that income will be tax free. Please guide me
Hi Rajat
No , if you give money to your mother, it will then be her money and all tax will be her’s . Your father has nothing to do in this .
Manish
Thanks Manish
If my wife receives some amount of money and gold from her father and if the transaction is documented and signed by me and my wife will it be any kind of issue for me as i am a government employee paying tax already
No Binu
There wont be any issues !
Respected Manish ji any amount given by son by cheque by net banking to father as a gift is taxable ? Is it to be shown in IT returns? if yes how it is to shown in IT returns of father?. Please clarify. Thanking you in anticipation.
No , its not taxable.
Respected Manish ji can my wifes grandfather gift 1500000 to my daughter
Yes
Suppose I am receive Rs 10 lacs from my son and I Make a FD for the same and earn interest. However, my total income including that from this FD is below the taxable limit . Are there any tax implications for my son , particularly on interest earned on FD from his money.
No , your son has no tax implications anyways !
Dear Sir,
If mother Gifts Says Rs 12 Lacs to his son via cheque and also make a deed on plain paper stating reason as love and affection , amount gifted, date, cheque no and signatures of donor and recipient but not registered and neither paid stamp duty. After few months she expires, can that Deed on plain paper can act as legal evidence to make it non revocable if prosecuted by other Class 1 legal heirs ?
Regds
No , once its paid by cheque . It should not be challanged !
Dear Manish,
My dad who also file his ITR every year transfered arnd 2.2lac in 4 installments to my account via cheque and direct deposit. He just transferred saying keep it and use when needed.
I am under 30% tax slab and want to understand tax points related to this.
Rgds
Hitender
No tax angle for you on this money as of now .. Because any gift from parents to kids or vice versa is not taxable !
Dear Brother,
Please tell me. My wife sends around 8000 INR every month to her mother who need financial aid to sustain.
Can she show this expense to save tax? If yes, please tell me how.
Many thanks!
No
Nice Article…
Kindly help me[25 year age]…
Each month I transfer(NEFT) 18k to my widow Mother(housewife [age < 60]) as monthly expense for her, my wife and my younger siblings.
I'm leaving in other state than my family…
Is there any way or trick to get tax exemption for me on this…
Because it is very hard to live in this situation…. if not how could I can address this type of scenario to government.
No there is no way out of this to save tax. Because you first pay tax, get the money and then transfer the money to mother
ohhh…
Thanks for the reply…
India mai hona hi nhi chahiyae
Thanks for your comment Ashwani
If I wish to gift Rs. 1.5L to my father in-law, is there any taxation involved?
Hi,
I have a question regarding transfer of property from my sister to my name. We own one flat where my sister will transfer her flat on my name as she is investing in other property. But the issue is I and my sister have diffrent surnames on all our documents. so can we make one affidavit regading our relation so that we can get benifit of not giving stamp duty once again beacause as per current governmnt rule, for property transfer between family members we dont need to pay stamp duty.
Can you please help me with this scenario.
Regards,
Yogesh
I forgot to mention that my son is the primary account holder in the joint account.
I am in the 30% tax bracket. My son aged 22 has no income. I have a joint account with him. If I transfer an amount from my account to the joint account online and then put it in an FD and the interest on the FD is not going to exceed 1.8 lakhs (is that the limit?) then will there be any tax to be paid on the amount transferred and/or interest earned either by me or my son?
Thank you.
Hellos,
I have an NRE account.
Please let me know how much amount can i transfer to my Uncles (Dads brother) account as loan.
Will i be liable to pay any tax if i do so.
Regards,
Paresh.
You dont have to pay any tax for that in India
Hi,
I have an annual income of 9 lakhs.If i gift my wife 50 thousand and she invest that amount in ELSS in her name .Can i get tax exception for that 5o thousand .
I mean is there a provision to claim tax exemption for an amount which is less than 50 thousand , i have gifted to my wife of children
Thanks
Robin
No you cant get any tax exemption for gifting it !
Hello,
Suppose brother gifts sister a sum of Rs. 10 lacs and that sister gifts her husband the entire amount. And that amount is gifted to the sister of husband. Is it taxable in hands of any recipient?
Yes, you have just used a chain of people here . Ultimately the money went from A->B , and the rules will apply whatever the rules are !
Retired person age 72 years. Planning to buy a flat. No funds from my side. The money will be given by my son in law who is NRI. How the money translation will be looked at from tax point and what precautions one should take here.
I think you dont have to worry on the tax part here. Its allowed between the relations you are talking about. However as its a big amount, I think taking advisory from a CA would definitely help
Manish
Dear Manish
Am not very conversant with tax laws but like to pay my taxes correctly.
Ques 1 Our son got married in February this year and friends and relatives gave various amounts of Shhagan. Total amount would not be more than 2-3 lac Rs.
Our son is an australian citizen and has an NRO/NRI account in India which I operate as, Mandate,. Should I deposit the money in my account and pay tax on interest generated? Any other suggestion? like i said, am happy to pay tax on interest generated but would like to avoid tax on the entire amount. After all it is wedding gifts.
Ques 2. My wife receives money through paypal from software consulting work done by our son mainly in the USA. Can this be taken as a gift from the son to his mother?
Thanks
Dilip
1. The only problem now is HOW DO YOU PROVE THAT ITS WEDDING GIFT? You can always bring any cash and say its a wedding gift. So now I think the best thing is to use the cash for your expenses and not deposit it, otherwise have a plan to prove that its wedding gift.
2. Yes, it can be .. She can get any amount of money from Son as gift. No tax to her !
Manish
Dear Manish
Thanks loads.
But I do have a list of all the friends and relatives who gave shhagan. In fact I want to deposit in my account and transfer to our son in AUD since it reghtfully belongs to the newly weds.
Question two. While our son can gift to his mother and me from earnings made through projects done for US clients it seems illogical that in such a case no one pays tax for the earning. The US client pays the mother directly through PayPal so even our son has not paid tax. Seems correct that someone must pay tax.
Kindly enlighten further.
Regards
Dilip
Dilip
If you can prove that it was a gift on the occasion of marriage, then you can deposit it in teh account with any taxation .
Also if your wife is getting the money in her account, then its her income and she should be paying the tax
Manish
Thanks Manish. Now it’s all clear. My wife pays the tax and the shhagan money can be explained. We have records. You have been very helpful. Grateful.
Ohho. Just one more question springs to mind. We are going to Australia to visit the kids. What if I exchange the shhagan cash for Aust dollars and give our son the money. Any problems??
Tks again. Regards
No issues in that
Hi I want to know if I have taken a gift amount 1 lac from my mama ( mom’s brother ) and I want to document it on 20 rs stamp paper . What time and date of the stamp paper should be .
Gift taken in may 2014 . Then stamp paper should be of what date ?
Hi parag
The question asked by you is beyond our scope. Its suggested that you hire an expert on the issue and pay them for the advice.
Manish
Hi Manish,
Thanks for you effort for clearing so many queries for different issues.
Well I have one query as well, hope you can help in to understand…
I booked a flat in name of my Brother and me in 2011 and now same is ready for registry. My father paid a handsome amount over the period of time from his bank to fulfill the builder payments.
My query is, after the registry done for that flat under mine and brother’s name, do we need to show amount paid by my father in your ITR? Or same can be considered as gift from Father to Son to buy property.
It can be shown as gift .. no issues for you !
My brother in-law gave me 4 lac in cash as wedding gift after 3 month of wedding to buy a car. I deposite that money in my bank account as cash in hand. Do i need to pay tax for this money? Do i need to declare it in income tax return?
Please advise.
I suggest not to deposit the money in account, because how will you prove that the money was given to you as gift ?
I already deposited that money. Now is there anything i can do?
NO
Dear Manish,
I transferred some 9 lacs to my wife’s account from my retirement benefits. She invested same with her friends in a housing scheme. I am still supporting scheme from my account funds. There is no profit due to downward in reality. House will be ready in next two to three yrs. Income tax authorities have sent her sms to file IT Return for that year. She has never filed IT Return earlier as her income has been minimal due to savings, small gifts from relatives and self employment. All transactions are through cheques. What do you advice please.
You need to meet a CA and file the returns
Yes, it would be taxable .
Manish
Return/interest on money gifted to wife will be clubbed in husband’s income so if money is gifted to major son and son gifts it to his mother then what will be the scenerio? Kindly guide.
Not allowed , you cant just fool the system like this 🙂
My wife’s file is showing negative capital due to excessive loss in share market and loan borrowing from relatives. Can I gift her a amount say 10,00,000. by which she can repay the amount sue as loans.
Will this be taxable in either my gfle or her
Thanks
It will not be taxable because its not getting invested anywhere !
Hi , one of my friend want to gift me 80 lacs.
Q1 Its taxable to whome me or my friend
Q2 what document req to be take from friend.
Q3 How much tax need to be pay.
Q4 What IT actionable.
1. You
2. None , if its bank transfer, the entry is already there
3. That will be added to your income and tax needs to be paid as per slab
4. NOt sure what you want to ask
Hi,
My Aunt was widowed few years back and she was remarried soon after. Now her ex-mother-in-law wants to gift her amounts in excess of the stipulated tax free limit of Rs. 50,000. The amounts would be transferred through online banking and she would also be furnishing a letter for the same along with her PAN no.
Will it be taxable?
Hi Nikunj
Yes its taxable . There is no relation between them now . Hence above 50k it would be taxable ! . But if this gift was done on the marriage, as marriage gift, then its ok ! , no tax
agar main ek makan 16 lakh ka apne frend ko rajesterd deed se gift karta hun to kya tax mujhe lagega
No
Hi,
Thanks for sharing loads of information on this site.
I would like to gift Rs. 2 L to my mother-in-law and a few shares on off-market transfer to my grand-mother. Will either be taxable? What additional tax paper work will be needed? Thanks.
Buddy.
If you are going to do the online transfer or through cheque then no paper work is required
Hi,
If i transfer 1lac rupees to my father as gift or , just like this for his expenses, do i get deduction in my taxable income? what is the limit.
You never get any exemption !
Thanks 🙂 for quick reply.
Hello Manish
I want to know about a case where father gifted a car to his major son by taking a loan from bank in his own name. What is the tax implication in it? Can father get deduction for that interest?
Hi Divya
There is no tax exemption on loan for car taken !
Sir, please help me to understand….. My cousin is going for Australia, nd for visa we collected 17 lacs cash nd directly deposited to bank account…. Now we got scrutiny, now what should we do
Hi Rushi Babariya
You should not have deposited it like that. Lots of cash deposited at once creates issue. If you want I can connect you to our tax partners who can solve your scrutiny case, but they will charge fees for it . Let me know
Manish
Hi Manish,
First of all Thanks for the interesting article. As per the below list
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
Any one can give gifts to avoid tax ( taxable income ) as long as they have proof of transactions.
Do they have to mention the same in their IT returns ?
If yes, its a great idea to save tax as well as helping our family.
Please suggest.
Thanks,
Shravan.
Shravan
As I mentioned in the article,. You cant save tax on the money you gifted, Tax saving happens only for the person who got it !
Manish
dear manish,
really a gr8 article. my query is
I transfer rs 10000 monthly to my mom’s account and around rs 15000 to my wife’s account. all the transaction is done thru net banking. can I claim IT deduction for the same. if yes how to file it in the IT return form. pl advise
major nitin
No you cant claim . As I said in article, you can never claim the deduction for the amount you are transferring, read our article https://www.jagoinvestor.com/2015/02/gift-tax-rules-in-india.html
Dear Sir, I m govt. of Punjab state employee. my father gave me Rs. 40 lacs after selling their house to help me for purchasing a new house on my name. my father will pay me by cheque.From your article above, I came to know that I need not to pay tax. But I want to avail tax exemption. May I need to make gift certificate or I simply get written from him on a plain paper that he gifted me this much sum? Please help? Or I need not to show it in my ITR.
Just ask him to make you payment via cheque/netbanking/DD , so that it can be tracked back ! . Else it will become your income if its in CASH etc !
Hello sir
I am a GOM employee. I got rs 9 lakhs from my mother. she has sold her personal property and the received amount she distributed among her childrens out of affection. She has given me cheque and I deposited it in my normal salary account. From your article above, I came to know that I need not to pay tax. But I want to avail tax exemption. May I need to make gift certificate or I simply get written from her on a plain paper that she gifted me this much sum? Please help? Or I need not to show it in my ITR.
In your case, you dont need to do anything . You dont need to pay any tax on this Rs 9 lacs .
Manish
Hi Manish,
Thanks for this post, which is very Informative !! I am having one query as below.
1> My wife is housewife and her income is CASH through home tution. How she can able to file her Income under which head ?
2> We don’t have any document for the CASH income. How she can able to justify, if Income Tax scruitiny happens ?
3> How much CASH incme she can able to show in one Financial Year ?
Would like to appreciate early response !!!
Many thanks in advance !
Pravakar
Being income from business/profession, she needs to file and report the same in ITR-4.
thanks
Ashal
Is she depositing the cash in her account or not ? Because if its not going in the account, then officially there is no income ? She can put upto 2.5 lacs of cash without any issue !
Dear sir,
Thank you for this informative article. Recently, a friend of mine had a serious accident and is in coma. As the hospital bill is running into lakhs now, we thought that we would raise funds from various sources and transfer the amount to his father’s account. This amount may be to the tune in tens of lakh. Would his father be be taxed on this amount? The amount will be paid to the hospital within 2 or 3 months. Thanks.
If later on the same amount is returned by father to all of you, it ‘ll not be his income.
Thanks
Ashal
Hi,
Would you please help to understand that If I gift money (or Gold/ELSS etc) to my spouse then will I be eligible for any exemption?
Thanks
Narendra
No you wont !
Hi Manish,
Can I transfer 1 lakh to my MIL through NEFT on a single day? Willl there be any tax implications?
Thanks,
John
It is not a gift btw. She is borrowing funds from me. She will repay it with interest on a monthly basis.
Yes, you can surely do it ..
Hi Manish,
I didn’t go through the whole list of responses.Regarding the 2,00,000 limit on a credit card
* Is it payment made or transactions in a single year ?
* Is it the spending/payment on one card or total of multiple credit cards in a single year ? I have card from different companies.
* Is it calculated from Jan-Dec or April to March ?
Thanks
Sri
Its the payment done in a year on total of your cards in a financial year (April – March)
Manish
Sir,
While selling property to sister/brother is it possible it show it as a gift?
Like I gift the house/land to my sister/bro and she/he gifts me back the property value in cash to avoid tax?
No Sham
This is not possible , if you are giving it as GIFT , that means there is no consideration in between . What you want is a clear indication that you want to bypass the rules. Its just not possible !
Manish
Sir, As far as by passing the rules is concerned, even if I dont pay tax on the capital gains from the property sale when given as gift, When my brother is selling it he will be anyway paying the capital gains on the full amount.
for eg: if I bought a land for 5 lakhs and if it is now worth 10 lakhs, I gift my land to my brother for free and in return get 10 lakhs as gift. Now if my brother sells it he has to pay capital gains tax on the full amount (-registration charges) i.e 10 lakhs. The capital gains tax will anyway get paid on the final sale out of the family . How is this bypass?
It’s possible. The only thing is – to complete the gifting of property in question, the same should be registered in the name of your brother.
Thanks
Ashal
Dear Sir,
My son would like to transfer a sum of rs Fifteen lac each to me and my wife as gift out of his earnings after paying tax on the earnings. My queries are is the amount taxable in my hand( I am aware that the interest on the deposit is taxable) how do I explain to the income tax authorities if my case is taken up for scrutiny? Can the amount be treated as the repayment of the educational expenses I had expended on his graduate and management education? What kind of document do I prepare to record the transaction ? I shall be obliged to receive your considered opinion.
Thanking you in advance,
R.P. Narasimhan.
Chill Sir .. you dont have to do much . You can surely show the officials that its coming from your son banks account and its a gift. nothing will happen (because anyways there is no cheating in this)
Can my uncle who resides abroad send me a gift? And how often can he do that?
Yes he can do that .. he can do it any number of times !
i give my father gift?
Yes you can
My father in law deposited 2.5lac in cash my account due to some reasons, now I am transferring it in his account. Will it be taxable to me?
You have no proof that cash was deposited by father .. I know you are saying truth , but how do you prove it ? You will have to pay tax on it ..
I am a Retd. Gov. servent.I gifted 6.50 Lakhs to my unemployed son he kept 50k for his use and got a FDR for 6.0 Lakhs for one year on maturity of FDR he will earn intrest.Whether this intrest amount will be clubbed with mine income or will be income of son???
Thanx
It will be clubbed with son’s income !
Dear Sir,
There is a peculiar situation came across me. If mother in law (Super Senior Citizen) from her account GIFTs Rs X lakhs to her daughter in law (housewife – no other income) in her account. Both of them are below their taxable income. The same amount will be invested in FD on daughter in law’s name and the interest earned on that will be transferred to mother in law account as the interest is received (auto renewal & interest redeem ). What will be the tax implication for both of them. Do any one of them needs to file ITR ?
Rohan
The income will be treated as daughter in law income only and taxed in her hands
Manish
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
If you are getting excess amount, then its your income ! and yes it should be taxable !
Dear Brijesh, in simple words, you have been fooled. Should I say more?
Thanks
Ashal
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 🙂
Please contact a CA, as it’s not gifting, it’s your income from your profession of property broking.
Thanks
Ashal
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 .
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).
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
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?
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
No 🙂 .. just make sure its done via bank transfer so that the transaction is clearly visible !
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.
Better see a lawyer for this . He will have to make a GIFT deed and initiate the transfer
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
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.
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 !
Thank you Mr. Rahul for the prompt response! Really appreciate it…
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.
(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.
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
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?
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.
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 .
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
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
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.
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
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
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 ???
This is a bit complicated and a CA should be consulted for this
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
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 ?
Dear Uday, the income ‘ll be in the names of of your parents, hence taxable to them only.
Thanks
Ashal
They will be taxed
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
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
Yes, you will have to pay income tax on that.
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
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
Its not his income . He does not have to pay any income tax
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.
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
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 .
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
Dear Rohan, what’s the holding period of such shares in your parent’s demat account?
Thanks
Ashal
Dear Ashal,
Holding period is more than 20 years and this shares are in physical form only not in demat.
Thanks
Rohan
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
Not you, but your parents might have to consider the taxation part !
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.
Dear Vishwanath, clubbing provisions ‘ll still apply.
Thanks
Ashal
Yes ! You are right ! Many thanks and regards.
It will be considered as the income of the person who has a higher tax slab .
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.
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.
There is nothing like that. Your gifts come out only from your POST TAX INCOME
Hi,
my father wants to gift me his property. what tax rate/stamp duty or any other expenses will I have to incur?
Rgds
Dear Dev, please contact an advocate in your city to know the stamp duty applicable in your case.
Thanks
Ashal
None . You dont have to pay anything
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
Dear NK, no. the maint. money received for you and your kids from your ex husband is not taxable.
Thanks
Ashal
Yes, It has to be treated like an income only
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.
Dear Ajmer, banks apply TDS on accrual basis for each FY, hence it’s advisable to declare the interest for each FY.
Thanks
Ashal
It should be calculated on yearly basis for income tax purpose
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.
Dear Kittu, please declare the same as exempted income.
Thanks
Ashal
You dont have to pay tax on it !
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?
Dear Nishant, how can a 6 months old minor enter into a loan agreement to give loan to own mother?
Thanks
Ashal
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?
Dear Manish, do it at your own risk. Be ready to face the queries from Income Tax officials later on.
Thanks
Ashal
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.
Dear Ajmer, the basic interest is your income. the interest on interest is her income.
Thanks
Ashal
It has to be clubbed to your income !
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
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
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
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
Actually *she doesnt have an account in India.
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
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
You dont need any documentation .. money taken from parents dont attract any documentation !
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.
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
No , there wont be any tax for mother in law !
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
You can transfer money in any manner (bank transfer) ,but it would be a good idea to take post dated cheque !
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
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
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
He should transfer it to your account and then you pay the loan !
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
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
No tax implications for grand children .. for grandfather , he has to make this gift out of this TAXED INCOME only ..
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..
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
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 !
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
Dear Pandit, the plain answer is NO. You can not claim any tax benefit on such gifting.
Thanks
Ashal
No , there is never a tax exemption for person who is gifting !
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
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
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 !
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
No it will not be taxable to you upto any limit .
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
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
Ok , tell me this , What is your yearly income ? Is it below the taxable limits ?
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
In you case, you can use 15G !
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
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
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
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
Dear Kamal, why all the money should be in FDs only? Why can your wife not put some money in debt funds?
Thanks
Ashal
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
Dear Kamal, if some thing is not know to you today, ‘ll you remain ignorant for it forever?
Thanks
Ashal
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.
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
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.
Dear Kittu, how the 6L Rs. in joint bank account came originally? Please display the money trail.
Thanks
Ashal
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
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.
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
Thanks very much for this valuable guidance.
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 !
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
Yes, you can file a form 15G so that they dont deduct your TDS . go ahead !
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
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 ..
Dear R. Das, what benefit ‘ll you get from this gifting?
Thanks
Ashal
You can just transfer it to your wife .. nothing to be done here !
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?
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
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 !
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?
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
1. Her name
2. No need!
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.
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
Thank you sir for the prompt response.
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?
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
There is no rules , you can give it anyways .. its your friend who has to worry , not you !
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
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
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.
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
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.
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
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….
Dear Manish, please prepare a Loan agreement for the same.
Thanks
Ashal
Thanks a lot Ashal for valuable advice,
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…
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
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.
Dear Manish, act accordingly.
Thanks
Ashal
As far as the transaction has happened without any intention to avoid tax, its fine !
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
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
No , if its your own income, you can just transfer it , but if its a income in INDIA , then you pay the tax !
If i get the money as a gift from my NRI Friend or given a loan to me, is it taxable in my hands?
Dear Venu, if the money is coming as gift, it’s taxable. If it’s loan, no tax.
Thanks
Ashal
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 !
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.
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
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 !
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?
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
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.
Depends from where are you getting that gift, if its from parents etc, then you dont have to pay tax .
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?
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
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 !
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
If i give some amt. to my daughter as gift with an intention to curtail my income tax. Will it work?
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
No it wont . If you can justify all the answers asked by tax inspector in future, then go do it, else better dont !
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
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 !
Dear Rakesh, yes you need to quote the gift amount as EI in the schedule you are referring to.
Thanks
Ashal
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
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
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
1. Yes
2. YOu dont have to
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
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
Sandeep
1. Read this one – https://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 .
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.
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
No income tax on this , because father is law can gift son in law money for this cause
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.
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
No , you cant .. all the money from gift someone is considered from your taxed income, not before tax !
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
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
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 !
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
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
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.
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
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 .
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
Dear Rajkumar, can you elaborate your query? I’m unable to understand.
Thanks
Ashal
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
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?
Hi abhijit , I didnt get the context you are talking about , where in this article are we talking about transfer of loan ?
Hi Manish,
It was as per comments provided by Ashal.
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.
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%
Thanks a lot Manish for timely guidance. Appreciate your efforts.
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
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?
Raman
She will not be paying any tax . No need to make any document . Just be ok with it 🙂
Manish
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
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
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
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.
Dear Santosh, yes your understanding is correct now. 🙂
Thanks
Ashal
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.
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.
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 !
If i give rs 50000 to my wife as a loan then can i save tax on these rs 50000 or not.
Many Thanks
Dear Shahnawaz, no. You can not save tax due to gifting or loaning to your wife.
Thanks
Ashal
No you cant . One can never save tax by giving. Only the reciever does not have to pay tax !
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?
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
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
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.
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
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.
Dear Anil, Sorry to say but you can not claim any tax benefit from such gifting to your mother. 🙂
Thanks
Ashal
You dont have to do anything on this . This amount is anyways after tax income !
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