meabhijit (Project Manager) (172 Points)
23 July 2013Hi,
My paternal uncle is giving me an amount of 5Lakh as gift out of love. I know this is tax free since its a gift from relative. Please let me know:
1. Is a gift deed necessary for the amount?
2. Does this transaction attract clubbing of income? (Interest on this 5L will be clubbed with uncle income?
3. If clubbing of income is attracted, how much time does clubbing remain valid? Meaning the income on 5L to be clubbed with uncle income? Is there any way to avoid it?
Thanks in advance.
CA. Kuldeep Singhi
(Entrepreneur)
(424 Points)
Replied 23 July 2013
No clubbing provision are not attracted in this case & gift deed is not necessarily required but this amount will not be allowed as expense to your uncle
meabhijit
(Project Manager)
(172 Points)
Replied 23 July 2013
Thanks.
I do not understand why this gift not attract clubbing of income? It is not similar to person gifting his income to other to avoid taxation? (Just wanted to ensure that all aspects are covered before I initiate the transaction)
CA. Kuldeep Singhi
(Entrepreneur)
(424 Points)
Replied 23 July 2013
Clubbing provisions are attracted because this planning is adopted when the person actually has the money but he shows it as tfd. to his wife or son's wife just to divert the income but in your case money is tfd. from paternal uncle which most probably would not be retnd. & also clubbing provisions are applicable only for Spouse,Minor Child & Son's wife . Refer Section 64 Series
Chinnu Raj
(CA Final Student B.Com)
(1067 Points)
Replied 23 July 2013
Yeah.Completely agreed with Kuldeep jii........
Live class on PF & ESI Enrollment & Returns Filing(with recording)
CAclubindia
