Money transfer from father to son's bank a/c for startup.

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Siva (Querist)
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14 December 2018 I am planning on starting a software business with 2 cousins of mine in Bangalore. Each of us are contributing 30 Lakhs each towards it and plan to register a Pvt Ltd company. While the other two have money in their accounts already from earning abroad, I will have to take the money from my father. Now, I have a few questions.

1. My father is taking a loan of 30 Lakhs against one of our property from a nationalized bank. He has the money in his bank account now and the loan is fully disbursed. How do I take it to my account? Can I simply transfer it online or get a cheque from him?

2. Will I be taxed even if my father took a loan?

3. Will the bank ask any questions? I have a personal savings bank account with ICICI Bank.

4. Someone also advised me to make my father a director. My father is not ready because it will create complications for his tax returns. He wants me and two cousins to be the directors only.

5. A lot of places online tell me that I will get notice from IT department and I will have to pay 30% taxes and penalties. Is this true?

Thank you so much for taking some time out to read my queries. I really appreciate the fine work done by this community.

Z (Expert)
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14 December 2018 Since yours is a startup there are many things which you need to consider.
You may mail me for full consultation.

prateek63@yahoo.co.in

Siva

Siva (Querist)
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14 December 2018 @Z, the startup aspect is being taken care by a cousin/partner. I just want to know if there would be any tax implications if my father transfers me the money from his bank account to mine. Will i be liable to pay taxes on that 30L?

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Z (Expert)
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14 December 2018 You may prefer a gift deed for this purpose. If you are not a minor, then there would not be any tax implications on you.

But kindly also consider if this is permitted by the T&C of the grant of loan.
Anyhow, if you are not a minor, as such, merely by this transaction, you would not be exigible to tax.

Gift from relatives is not chargeable to tax. [Please, they are not exempt but are not chargeable to tax in the first place.]

Siva

Siva (Querist)
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15 December 2018 @Z, Much appreciated. Thank you. Does the gift deed have to be registered or can i just get a letter typed on a stamp paper and get it signed by my father? Also, is it just for my reference or do i have to submit the gift deed anywhere or to anybody?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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15 December 2018 Gift deed need not be registered. It can be in plain paper signed for evidence when asked for. Gift from relative exempt from tax.

CA. Mayur M. Mamtora

CA. Mayur M. Mamtora (Expert)
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15 December 2018 You could take it as a Gift from your Father. Gift from Father is not taxable. Make sure to draft a Gift Deed stating the gift is out of natural love and affection and that it is an irrevocable gift from your Father. Also better to take an Account Payee Cheque from Father rather than Cash.

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