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Gift from son

Shamita (Learner) (410 Points)

15 May 2011

The father needs cash in his business. Can son give him loan of more than Rs. 20,000.00 in cash or he should gift his father in cash, then father to invest that mobey in his business? Please guide.

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13 Replies

Devendra (Chartered Accountant) (4775 Points)
Replied 15 May 2011

Son can give gift to father. As per section 269SS of IT Act, 1961, if the amount is above Rs. 20000 it should be paid by an Account Payee Cheque or a Bank Demand Draft. Cash loan only upto Rs. 20000 allowed under IT Act, 1961.

Regards,

Devendra

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Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 16 May 2011

It better to give the amount by way of a gift. On a safer side, prepare a gift deed and get it notarised. There is no bar on the amount of gift. But if you want to give it by way of loan, and if it exceeds Rs. 20000, then it should be paid by way of account payee cheque or draft only. Now a days even RTGS and NEFT is equivalent.

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Shamita (Learner) (410 Points)
Replied 16 May 2011

Can son gift Rs. 19,000.00 in cash, twice a year to his father. Will this be allowable?

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 16 May 2011

Originally posted by : Shamita
	Can son gift Rs. 19,000.00 in cash, twice a year to his father. Will this be allowable?

go to any banck branch and get a bankers cheque in name of father in exchange of cash + little bank charge, it will confirm the transaction buy bank , upto 49900 there is no prob to get banker's cheque.

pulkit gupta (CA final student) (160 Points)
Replied 16 May 2011

penalty is attracted if the sum of previous loan(whether in cash or cheque) and the current loan in cash excceds Rs. 20000.

eg prev o/s loan from Mr. x 15000 (cheque/cash)

current loan in cash 6000

In such case penalty will be attracted

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Sagar Zankhariya (Audit Assist.) (278 Points)
Replied 17 May 2011

son can give maximum of Rs. 50000 cash gift in a year to his father there is not any restriction.

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 17 May 2011

Originally posted by : U S Sharma
	Originally posted by : Shamita Can son gift Rs. 19,000.00 in cash, twice a year to his father. Will this be allowable? go to any banck branch and get a bankers cheque in name of father in exchange of cash + little bank charge, it will confirm the transaction buy bank , upto 49900 there is no prob to get banker's cheque.

No need to get a bankers cheque. And there is no limit for the same. Banker's cheque can also be above Rs. 50000. But to gift your father, either you can pay him the desired amount through cash along with a notarised gift deed or simply pay by a cheque. It will be sufficient.

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 17 May 2011

Originally posted by : pulkit gupta
	penalty is attracted if the sum of previous loan(whether in cash or cheque) and the current loan in cash excceds Rs. 20000. eg prev o/s loan from Mr. x 15000 (cheque/cash) current loan in cash 6000 In such case penalty will be attracted

No penalty is attracted if the current years loan is less than Rs. 20000 in cash, irrespective of the opening balances. You can take loan in cash Rs. 19000 p.a. from a single person. Only total in the given previous year should not exceed Rs. 20000

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 17 May 2011

Originally posted by : Sagar Zankhariya
	son can give maximum of Rs. 50000 cash gift in a year to his father there is not any restriction.

There is no limit for gift from relatives. One can receive any sum as gift from relatives and the total amount is exempt. Only the problem arises to the person maikng gift that he needs to prove his source of income if required by the dept.

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Shamita (Learner) (410 Points)
Replied 17 May 2011

Actually the problem is that there is shortage of cash in books (non-auditable business). So we want to route in cash in the books, by way of son gifting his father in cash and father investing this cash in his business. This is required in the books for F.Y. 2010-11, so that is why the gift needs to be in cash only.