Saving A/C Salary A/C Questions

POSTED BY Pravesh Jain ON January 13, 2013 11:52 pm COMMENTS (8)

Dear Experts, Request your answers on below query:

1. Should someone deposit money in his/her salary account apart from money deposited from your employer as salary?

2. If a friend requires money temporarily and you give it via cheque…is it fine to get exact money back into same account without taking any interest? If it is fine to do it, should someone do this from salary account or saving account.

3. If three people are living in rented flat, can they pay to owner by transferring their part of rent in one person salary/saving account and pay it? Is it fine to do this?

4. If you go outing with friends and pay money from your account via debit card, is it fine to get the friend part of money back into your account via net banking /cheque?

Thanks in advance. Also, please do suggest negatives someone has done it in past.

8 replies on this article “Saving A/C Salary A/C Questions”

  1. sanjoy maiti says:

    i deposits branch by cash its a income? or is my salary a/c but saving a/c uptonot tax

    1. Hi sanjoy maiti

      I am not clear on what is your question. Please repeat it with more clarity

      Manish

  2. BanyanFA says:

    Pravesh,
    Glad to see that you are taking seriously the transactions in your bank account. Trust me, most of us don’t do it and end up into hot waters when our case is pulled into scrutiny by the tax officer.

    Most of the minor debits out of your account should not be a problem. However, to avoid this noise, try to use a credit card and make monthly payments to it. This will shift all cluttering of small debits to your credit card statement.

    For important points:
    1. For House rent arrangement, I don’t think that there would be an issue. Just make sure that to simply things, document the arrangement with your friend that you are paying x% of the rent by sending the funds to your account.
    2. You can deposit any amount of funds into your salary account, however, make sure that if it is untaxed income, disclose it in your tax returns and pay taxes on it.

    3. Providing interest free credit facility to your friend and accepting the return into your same bank account should not be a problem. At times tax officers do challenge the authenticity of such transaction by challenging the return of funds from your friend as your income and not return of loan. For minor funds, it should be okay. But if the funds are large, I would recommend you to have some form of written document to save you from unnecessary tax hassles.

    Regards
    BanyanFA

  3. Pravesh Jain says:

    Thanks Ashal for your quick answers. I have further below doubts based on your answers

    Point1 & 4 – If friend is paying back by netbanking, do you think it is sufficient for authenticity? and will it not be qualified as gift?

    Point 2 – I read somewhere on Jago investor article itself, if you give money to your spouse than it will be gift. If money has to be returned back it will be through loan with some interest. Is this not similiar and it is friend instead of spouse?
    Also, what if the money you gave to friend generated some income say interest?

    Thanks.

    1. Dear Pravesh, here are my answers for for your queries.

      Point1 & 4 – If friend is paying back by netbanking, do you think it is sufficient for authenticity? and will it not be qualified as gift?
      Netbanking is itself a valid proof. Make sure the money is getting credited into the same account from where it was originally give to your friend.

      Point 2 – I read somewhere on Jago investor article itself, if you give money to your spouse than it will be gift. If money has to be returned back it will be through loan with some interest. Is this not similiar and it is friend instead of spouse?
      Spouse & friends are different. Are they not? The same differentiation is there in taxation laws. the money transactions between relatives comes under Section 64 of Income Tax Act. Now interestingly if spouse is earning any taxable income from the given amount & after that returning only the principal amount, the earned income ‘ll be treated as your income.

      Also, what if the money you gave to friend generated some income say interest?
      It’s his income & taxable under his own name.

      Thanks

      Ashal

  4. Dear Prasvesh, I’m trying to answer your query.

    1. Should someone deposit money in his/her salary account apart from money deposited from your employer as salary?
    If a question is asked for the source of the funds deposited by you in your salary account & you can show the proof of funds or can prove the authenticity of the funds, there is no problem in depositing amount into your salary account.

    2. If a friend requires money temporarily and you give it via cheque…is it fine to get exact money back into same account without taking any interest? If it is fine to do it, should someone do this from salary account or saving account.
    Yes, there should be a return entry. No need to accept any interest to prove the authenticity. Merely the return entry of amount is a proof enough. You are free to use any account to receive the return amount but normally you should accept the amount in the same account from where you gave the amount originally.

    3. If three people are living in rented flat, can they pay to owner by transferring their part of rent in one person salary/saving account and pay it? Is it fine to do this?
    It’s a tricky question. If the rent agreement contains all three persons’ name, then the set up you are demanding can be arranged but in case not all names are there in rent agreement , the transactions should be through cheques even among these 3 funds.

    4. If you go outing with friends and pay money from your account via debit card, is it fine to get the friend part of money back into your account via net banking /cheque?
    On a later date is question is raised by authorities, you should have the proof to authenticate the transactions between youi & yiur friend.

    Thanbks

    Ashal

  5. Pravesh Jain says:

    Hi Ashal,

    I am asking first time on this forum and added details in description but somehow those are not getting published. Can you help me where i am going wrong. Please find my query below:
    Dear Experts,

    Request your answers on below query:

    1. Should someone deposit money in his/her salary account apart from money deposited from your employer as salary?

    2. If a friend requires money temporarily and you give it via cheque…is it fine to get exact money back into same account without taking any interest? If it is fine to do it, should someone do this from salary account or saving account.

    3. If three people are living in rented flat, can they pay to owner by transferring their part of rent in one person salary/saving account and pay it? Is it fine to do this?

    4. If you go outing with friends and pay money from your account via debit card, is it fine to get the friend part of money back into your account via net banking /cheque?

    Thanks in advance. Also, please do suggest negatives someone has done it in past.

  6. Dear Pravesh, what’s the query.

    thanks

    Ashal

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