Gift by sister

This query is : Resolved

P.C. Joshi (Querist)
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16 June 2016 Dear Friends,

If a older sister gives cash gift of Rs 7.50 lacs to her younger sister.

(1) Is there any legal compliance required?
(2) Is it taxable or tax free both in the for donee and donor.
(3) Is any gift deed has to be made for this?
(4) Is it necessary that the gift as above should be given on marraige and any special occasions or it can be given any time?

Prompt and considered views are solicited from the members.

Thanks

P.C. Joshi

Amol S Joglekar

Amol S Joglekar (Expert)
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16 June 2016 01.sister is included in the definition of RELATIVE, so no tax as such u/s 56(2)(vii)
02. No tax for donor as well as donee
03. Gift deed is a registerable document and hence attract stamp duty at prescribed rate. There is, therefore, growing tendency to give a letter of gift
04. No need to give such gift on some occasion. Even if it is given on some occasion, sec 56(2)(vii) is not hit
05. Additional risk could be.......Assessing Officer may ask for "explanation" of cash balance......to donor.

P.C. Joshi

P.C. Joshi (Querist)
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16 June 2016 Thank you sir.

Just two doubts
(1) If the gift is given by bank transfer and the donor has sufficient legitimate income. Is it necessary that the income of donor must be reflected in the return filed/to be filed by him.

(2) If a gift deed is made on plain paper, is it sufficient. As per my knowledge, registration of gift dded for immovable properties is not compulsory.

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Amol S Joglekar

Amol S Joglekar (Expert)
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16 June 2016 01. If it is given by bank transfer, normally no questions asked. But under the DATA capturing system of revenue authorities, if the said transaction comes to light, you should be in a position to justify the quantum
Between relatives, stamp duty is NOT required