gift

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 March 2010 If i recd a gift from my brother's wife and children amounting to Rs. 150000 each in cash, is there any default as per Income tax Act, 1961.if there is any default then what is it and what is the maximum amount be taken from them as a gift.

M Prabhakar Menon

M Prabhakar Menon (Expert)
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30 March 2010 There is nothing wrong with getting gifts only the Income Tax dept may feel like taxing it This gift will be exempt u/s 56(2) but since it is in cash u may trip u/s 269SS so dont accept cash.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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30 March 2010 SEC 269SS PROVIDES THAT IF THE AMOUNT OF LOAN/DEPOSIT IS RS.20000/- OR MORE, THEN THE SAME SHALL NOT BE TAKEN/ACCEPTED OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE/DRAFT. SO I DONT THINK THE SEC 269SS GETS ATTRACTED.

OPINION OF OTHER EXPERTS ARE ALSO SOLICITED.

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CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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30 March 2010

The Income Tax Act 1961 (the Act) has been amended with effect from 1st October 2009 to provide that any gift-in-kind, being an immovable property or any other property, the value of which exceeds Rs.50,000 (rupees fifty thousand), will become taxable in the hands of the donee, being an individual or a Hindu Undivided Family (HUF), as income from other sources under clause (vii) of sub-section 2 of section 56 of the Act.
Therefore, any such person who receives a gift of any such property on or after 1st October 2009 must pay the income tax due on the value of the gift and disclose the taxable value of such property in the return of income for assessment year 2010-11 and subsequent years.

The following types of gifts will, however, not be subject to tax, i.e. gifts (a) from a person who is a relative; (b) on the occasion of marriage of the individual; (c) under a will or by way of inheritance; (d) in contemplation of death of the donor; (e) from any local authority as defined in the Explanation to section 10(20) of the Act; (f) from any fund or trust established under section 10(23C) of the Act; (g) from any trust or institution registered under section 12AA of the Act.

Relative is defined in the Act as (i) spouse; (ii) brother or sister; (iii) brother or sister of the spouse; (iv) brother or sister of either of the parents; (v) any lineal ascendant or descendant; (vi) spouse of any of the relative at clauses (ii) to (v); of the individual. Gifts received from these relatives will not be subject to tax.

Earlier cash gifts exceeding Rs.25,000 were subject to tax with effect from 1st April 2004. Later the Act was amended with effect from 1st April 2006 to tax all cash gifts having aggregate value exceeding Rs.50,000. Cash gifts also enjoy exemptions as is available for gifts-in-kind.
In this case , there is a default of section 269SS because gift in cash is more than Rs.20000/- , and you have to prove source of income of person from whom you have received gift, i.e Income Tax Department may demand for source of income of donor.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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30 March 2010 BANSAL SIR,

PLEASE GO TO FOLLOWING LINK--

http://law.incometaxindia.gov.in/TaxmannDit/DispCitation/ShowCit.aspx?fn=http://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2009ITAct/section269SS.htm

AS PER SEC 269SS (ABOVE LINK)ONLY IF THE AMOUNT OF LOAN/DEPOSIT IS RS.20000/- OR MORE, THEN THE SAME SHALL NOT BE TAKEN/ACCEPTED OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE/DRAFT.

CASH GIFT IS NOT MENTIONED IN SEC 269SS.

SIR PLEASE CLARIFY.

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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30 March 2010 Dear Mr. Sanjay,
You are right. Section 269SS applicable to Loan/Deposit, not on gift.

But Donor have to prove source of income.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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30 March 2010 YES DONOR HAVE TO PROVE SOURCE OF INCOME. I COMPLETELY AGREE. MY ONLY CONTENTION WAS THAT SEC 269SS WILL NOT BE ATTRACTED.

THANKS FOR THE CLARIFICATION