If a person transfers (via NEFT) around 6 Lac to his wife account for purchasing of a property & both are Income Tax Assessee then How entries will be reflected in:
a) Balance Sheets of both Husband & Wife
b) Tally entries of both Husband & Wife
c) Whether it will be considered as Gift? If Yes, then they did not make gift deed, will plain paper with signature of both will be suffice?
d) And, Is it mandatory to show as Gift, Can't a husband can transfer amount to his wife account?
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Query 2.
If a Person give Gift of around 2 Lac to his brother via A/c Payee Cheque, & both are Income Tax Assessee then How entries will be reflected in:
14 July 2024
Certainly! Let's address each query step by step:
### Query 1
**a) Balance Sheets of both Husband & Wife:**
- **Husband's Balance Sheet:** The transfer of 6 lakhs to his wife's account does not directly affect the husband's balance sheet unless it impacts his cash or bank balance directly. If the husband's bank balance reduces by 6 lakhs due to this transfer, it would reflect as a decrease in cash or bank assets on his balance sheet.
- **Wife's Balance Sheet:** The 6 lakhs received will be shown as an increase in her bank account balance. It will appear as a liability or as part of her net worth, depending on how detailed the balance sheet is.
**b) Tally entries of both Husband & Wife:**
- **Husband's Tally Entry:** If the husband maintains his books using Tally, the entry would typically debit the bank account (decreasing cash or bank balance) and credit a suitable account like 'Loan to Wife' or 'Gift to Wife' if it's considered a gift.
Example Tally Entry: ``` Wife's Bank A/c Dr. 6,00,000 To Bank A/c (Decrease in husband's bank balance) Cr. 6,00,000 ```
- **Wife's Tally Entry:** The entry in the wife's Tally would credit her bank account and debit an appropriate account like 'Gift from Husband' or 'Loan from Husband' if applicable.
Example Tally Entry: ``` Bank A/c Dr. 6,00,000 To Husband's Loan A/c (if treated as loan) Cr. 6,00,000 ```
**c) Gift Consideration:**
- **Gift Declaration:** Yes, the transfer of 6 lakhs from husband to wife's account could be considered a gift under income tax laws. However, to avoid any ambiguity or potential issues, it's advisable to have a simple gift deed on plain paper signed by both parties. This can clarify the intention behind the transfer.
- **Mandatory Showing as Gift:** While a husband can transfer money to his wife's account, if it's intended as a gift, it should be properly documented to avoid any tax implications or questions from tax authorities regarding the nature of the transaction.
### Query 2
**a) Balance Sheets of both Parties:**
- **Person Giving Gift (Brother):** The 2 lakhs given as a gift would decrease his cash or bank balance, thus reflecting as a reduction in his assets on the balance sheet.
- **Person Receiving Gift (Brother):** The 2 lakhs received would increase his bank account balance, reflecting as an increase in his assets on the balance sheet.
**b) Tally entries of both Parties:**
- **Person Giving Gift (Brother):** The Tally entry would debit the bank account (decreasing cash or bank balance) and credit an account like 'Gift to Brother'.
Example Tally Entry: ``` Brother's Bank A/c Dr. 2,00,000 To Gift A/c Cr. 2,00,000 ```
- **Person Receiving Gift (Brother):** The Tally entry would credit the bank account (increasing cash or bank balance) and debit an account like 'Gift from Brother'.
Example Tally Entry: ``` Bank A/c Dr. 2,00,000 To Brother's Gift A/c Cr. 2,00,000 ```
These entries help maintain clarity and transparency in financial records, ensuring compliance with income tax regulations regarding gifts and transactions between family members.
By following these guidelines and documenting transactions appropriately, individuals can manage their financial affairs effectively while adhering to legal and tax requirements.
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