How to transfer fund as a gift

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 December 2011 i want to give gift to my sisiter of rs 200000
how can i transfer that amt?
how much value of franking is required?
what is the next procedure?
when i transferring rs more than 50000, pan no is asked in deposit slip?
how this will used by bank or other sources?

U S Sharma

U S Sharma (Expert)
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31 December 2011 use proper banking channels, make payment by cheque/Demand draft, avoid cash transactions.

no franking required,

CA. Krishna K Neeraj

CA. Krishna K Neeraj (Expert)
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01 January 2012 Agreed with Sharma Ji

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Querist : Anonymous

Querist : Anonymous (Querist)

01 January 2012 is gift deed require?
if yes when?
why?
is franking or stamp duty require?

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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28 July 2024 Transferring a fund as a gift involves several legal and procedural steps. Here's a comprehensive guide to transferring ₹200,000 as a gift:

### 1. **Transferring Funds**

#### **Modes of Transfer:**
- **Bank Transfer:** You can transfer the amount directly from your bank account to your sister's bank account using methods such as NEFT (National Electronic Funds Transfer), RTGS (Real-Time Gross Settlement), or IMPS (Immediate Payment Service).
- **Cheque:** Issue a cheque for ₹200,000 in favor of your sister.
- **Online Transfer:** Use online banking facilities or apps to transfer the amount.

### 2. **Documentation and Compliance**

#### **PAN Number Requirement:**
- **For Amounts Exceeding ₹50,000:** Banks often ask for the PAN (Permanent Account Number) of both the sender and the recipient for transactions exceeding ₹50,000. This helps in tracking the transaction for compliance with tax regulations.

#### **Gift Deed:**
- **When Required:** A gift deed is a legal document that formalizes the gift transaction. While it is not always mandatory, having a gift deed is advisable for large amounts to avoid any future disputes or for legal clarity.
- **Contents of the Gift Deed:** The deed should include the details of the donor (you), the recipient (your sister), the amount being gifted, and a declaration that the gift is being made voluntarily.
- **When to Execute:** Prepare and execute the gift deed before or at the time of transferring the funds. This ensures that the gift is legally recognized.

#### **Franking or Stamp Duty:**
- **Stamp Duty:** In India, stamp duty on gift deeds is required in some states but not all. The stamp duty on a gift deed varies by state. It is often a small percentage of the gift amount.
- **Franking:** Franking is a process where a stamp duty is paid and the document is stamped with a franking seal. This can be done at designated franking centers or with stamp papers.
- **How Much Stamp Duty:** For example, in states like Maharashtra, the stamp duty for a gift deed could be 0.5% to 1% of the gift amount. It is best to check the specific rates applicable in your state.

#### **Procedure for Gift Deed:**
1. **Prepare the Gift Deed:** Draft the gift deed including all required details.
2. **Get the Deed Stamped:** Visit a franking center or use stamp paper (if applicable in your state) to pay the stamp duty.
3. **Sign the Deed:** Both the donor and the recipient need to sign the deed.
4. **Register the Deed:** In some states, it might be necessary to register the gift deed with the local sub-registrar. This is especially required for immovable property gifts but might not be mandatory for cash gifts.

### 3. **Tax Implications**

#### **For the Donor:**
- **Gift Tax:** There is no gift tax in India, but the donor should ensure the gift is within permissible limits to avoid any tax implications.

#### **For the Recipient:**
- **Income Tax:** Under Section 56(2)(x) of the Income Tax Act, any gift received by an individual is taxable if it exceeds ₹50,000. However, gifts from relatives (including siblings) are exempt from tax.
- **PAN Requirement:** The recipient will need to provide their PAN if the bank requires it for tax compliance purposes.

### Summary

1. **Transfer the funds** via bank transfer, cheque, or online methods.
2. **Prepare a gift deed** for documentation and legal clarity.
3. **Check for stamp duty requirements** and get the deed stamped.
4. **Ensure tax compliance** by considering gift tax rules and PAN requirements.

Always consult a tax advisor or legal expert to ensure compliance with specific regulations in your state or country.