Loan or gift

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

20 April 2013 Dear Sir,
I want to buy a land having value around 40 lacs. For which I will arrange 10 lacs out of bank limit and I will arange remain 30 lacs, from my agriculturist relatives.

Now please advise me, It is better to take it as a gift
or
take it as a interest free loan.

Please advise me which would be practical way and what are the formalties that I have to follow for the same.

Waiting for your reply.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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20 April 2013 Both will invite litigation.

Querist : Anonymous

Querist : Anonymous (Querist)

21 April 2013 Then what is the way to avoid litigation?

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Querist : Anonymous

Querist : Anonymous (Querist)

23 April 2013 Please reply soon

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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06 June 2013 First you be assured that the amount of 30 lacs has been shown in the return of income by your relatives. If not shown then ask them to file the return of income and take loan from them. If you take gift of 30L it exceeds Rs. 50,000/- which is maximum permitted gift as non taxable per year and accordingly on 30L you have to pay Income Tax as well as interest.

Querist : Anonymous

Querist : Anonymous (Querist)

07 June 2013 Agarwal sir, in my view, gift from relatives is exempt, hence limit of 50000/- would not be applicable here. Am I right?