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This query is : Resolved
19 July 2012
Sir,one of my friend is going to file his income tax return first time.He has taxable income from salary.Also,His father has gifted him 30000 Rs. in cash but his father has no income tax file as he is a farmer.
I want to know whether it is compulsory for him to have income tax file.Also,whether he should mention the gift income in other sources income or not as it is below 50000.If not,Than can he show the gift income in capital a/c?
One last question,As it is his first time return,from where he should take the opening balance of capital a/c?
Thanks in advance..
I want to know whether it is compulsory for him to have income tax file.Also,whether he should mention the gift income in other sources income or not as it is below 50000.If not,Than can he show the gift income in capital a/c?
One last question,As it is his first time return,from where he should take the opening balance of capital a/c?
Thanks in advance..
19 July 2012
Do not file any Balance Sheet right now. No need to show the Gift also. Gifts received from relatives are not treated as income.
.
File ITR 1, where you can show Salary Income, Interest Income etc.
.
.
File ITR 1, where you can show Salary Income, Interest Income etc.
.
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19 July 2012
If he is getting salary income, then ITR-1 is suitable form.
No need to show gift income as it is exempt. (from relative-father).
No need to show gift income as it is exempt. (from relative-father).
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19 July 2012
Thanks,but his father has never filed income tax return as he is a farmer?Is there any need to have IT Return to gift?
And,can he show the gift income in his capital a/c?
Thanks in advance.
And,can he show the gift income in his capital a/c?
Thanks in advance.
19 July 2012
Based on the facts and figures you are providing, there is no such need.
No need to show the gift income as it is already exempt.
No need to show the gift income as it is already exempt.
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19 July 2012
Thanks a lot
But he want to maintain his income tax file for loan purpose and for that he is required to have capital a/c.
So from where he should take opening balance of Capital a/c as it is first time?
And can he show the gift income in the credit side of Capital a/c?
But he want to maintain his income tax file for loan purpose and for that he is required to have capital a/c.
So from where he should take opening balance of Capital a/c as it is first time?
And can he show the gift income in the credit side of Capital a/c?
02 August 2024
For your friend's situation regarding the gift and filing his income tax return for the first time, here’s a detailed response addressing all your queries:
### 1. **Gifts and Income Tax Implications**
1. **Gift from Father:**
- **Taxability**: Gifts received from close relatives, including parents, are not taxable under the Income Tax Act, irrespective of the amount. Therefore, the gift of ₹30,000 from his father is not taxable.
- **Income Tax Filing Requirement for Donor**: There is no requirement for the father to file an income tax return just because he has given a gift, especially if his income is below the taxable limit and he is not otherwise required to file a return.
2. **Reporting the Gift in Tax Return:**
- **No Need to Report**: Since the gift from a close relative (father) is not taxable, your friend does not need to report it as income under "Other Sources" in his tax return.
- **Capital Account**: For the purpose of maintaining his capital account, the gift can be credited to the capital account. However, it’s more of an accounting practice rather than a tax filing requirement.
### 2. **Maintaining Capital Account**
1. **Opening Balance of Capital Account:**
- **First-Time Filing**: For the first time filing, the opening balance of the capital account should generally be the amount of money or assets available to the taxpayer at the beginning of the financial year. In your friend's case, if this is the first year, the opening balance can include the gift amount, personal savings, or any other initial capital he has.
- **Documentation**: Maintain records of the gift and any other contributions or assets as documentation for the capital account. This will help in maintaining accurate records for future references and loan applications.
2. **Showing Gift in Capital Account:**
- **Capital Account Credit**: Yes, he can show the gift as a credit in the capital account. This is part of accounting practices to reflect the sources of funds.
### 3. **Practical Steps for Filing First-Time Return**
1. **Collect Documents**: Gather all necessary documents such as Form 16 (for salary), details of any other income, and evidence of the gift received.
2. **Income Tax Return Form**: Use the appropriate ITR form (likely ITR-1 for salaried individuals) for filing the return.
3. **Maintain Records**: Keep a record of all sources of income and gifts. Maintain a ledger or capital account reflecting the opening balance and any additions.
### 4. **Filing Return and Loan Purposes**
1. **Maintain Records for Loan**: Banks often require a record of income for loan purposes. Ensure that the capital account and tax returns are correctly filed and well-documented.
2. **Consult a Tax Professional**: For detailed guidance and compliance, especially if there are any concerns or complexities, consulting with a tax professional can provide tailored advice and ensure proper documentation.
### Summary
- The gift received from a close relative is not taxable, and there’s no requirement for the father to file a return just for giving the gift.
- Your friend should credit the gift in his capital account if maintaining one for accounting purposes.
- For the first-time filing, ensure to include all relevant income and maintain proper records for loan applications and future reference.
Feel free to reach out if you need any more help or clarification!
### 1. **Gifts and Income Tax Implications**
1. **Gift from Father:**
- **Taxability**: Gifts received from close relatives, including parents, are not taxable under the Income Tax Act, irrespective of the amount. Therefore, the gift of ₹30,000 from his father is not taxable.
- **Income Tax Filing Requirement for Donor**: There is no requirement for the father to file an income tax return just because he has given a gift, especially if his income is below the taxable limit and he is not otherwise required to file a return.
2. **Reporting the Gift in Tax Return:**
- **No Need to Report**: Since the gift from a close relative (father) is not taxable, your friend does not need to report it as income under "Other Sources" in his tax return.
- **Capital Account**: For the purpose of maintaining his capital account, the gift can be credited to the capital account. However, it’s more of an accounting practice rather than a tax filing requirement.
### 2. **Maintaining Capital Account**
1. **Opening Balance of Capital Account:**
- **First-Time Filing**: For the first time filing, the opening balance of the capital account should generally be the amount of money or assets available to the taxpayer at the beginning of the financial year. In your friend's case, if this is the first year, the opening balance can include the gift amount, personal savings, or any other initial capital he has.
- **Documentation**: Maintain records of the gift and any other contributions or assets as documentation for the capital account. This will help in maintaining accurate records for future references and loan applications.
2. **Showing Gift in Capital Account:**
- **Capital Account Credit**: Yes, he can show the gift as a credit in the capital account. This is part of accounting practices to reflect the sources of funds.
### 3. **Practical Steps for Filing First-Time Return**
1. **Collect Documents**: Gather all necessary documents such as Form 16 (for salary), details of any other income, and evidence of the gift received.
2. **Income Tax Return Form**: Use the appropriate ITR form (likely ITR-1 for salaried individuals) for filing the return.
3. **Maintain Records**: Keep a record of all sources of income and gifts. Maintain a ledger or capital account reflecting the opening balance and any additions.
### 4. **Filing Return and Loan Purposes**
1. **Maintain Records for Loan**: Banks often require a record of income for loan purposes. Ensure that the capital account and tax returns are correctly filed and well-documented.
2. **Consult a Tax Professional**: For detailed guidance and compliance, especially if there are any concerns or complexities, consulting with a tax professional can provide tailored advice and ensure proper documentation.
### Summary
- The gift received from a close relative is not taxable, and there’s no requirement for the father to file a return just for giving the gift.
- Your friend should credit the gift in his capital account if maintaining one for accounting purposes.
- For the first-time filing, ensure to include all relevant income and maintain proper records for loan applications and future reference.
Feel free to reach out if you need any more help or clarification!
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