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Taxability of cash gift to son

bkp (self-employed) (99 Points)

02 June 2012

My son is planning to buy a house by availing of a Bank Loan, but will still fall short of about Rs 30 lacs. My question is if I gift him this amount what will be the tax implications? Would this be treated as Income in his hands, or would it be treated as a taxable Gift in his hands? What would be the most tax effective way for me to give my son this amount?

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8 Replies

Giridhar S Karandikar (Team Lead) (7548 Points)
Replied 03 June 2012

Gifts given to relatives are exempt from tax. Hence you can gift any amount to your son because as per explanation given in section 56 of teh I-T act relative includes any lineal ascendant or descendant of the assessee. As son is your lineal descendant the gift given by you to your tax will be fully exempt from tax

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CA Rakesh Goenka (CA & CS) (872 Points)
Replied 03 June 2012

above expert given u right answer .. it will be exemt from tax..............

Prateek Agarwal (Sr. Executive - Finance & Accounts) (1732 Points)
Replied 04 June 2012

Agree with Mr. Giridhar.

Gifts to son from father is exempted from tax.

CA.NAKUL GUPTA ( ) (184 Points)
Replied 04 June 2012

Suppose there is no gift Deed prepared by the Assessee(male) and Cash gift Introduced in Books of Account of the org. in which he is a sole Prop. and cash gift is from his father in law and mother in law and brother and sister in law on different dates of diff. amt. in p.yr. combined approx. 1lakh now will it be taxable or A.O. will add back it to assessee income or demand Gift deed or proof of income from Doner of cash gift as assessee is covered under tax audit...

Ajay kumar Jha (student) (32 Points)
Replied 04 June 2012

it will clubed in the hand of donor

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Arijit Bhattacharjee (ACA, M.COM) (407 Points)
Replied 04 June 2012

DEAR MR BKP,

IT IS VERILY TRUE THAT SEC 56(2) vii, SHALL HELP YOU ESCAPE THE CLUTHES OF LEVY OF TAX (ON YOUR SONS INCOME). HOWEVER MY SUGGESTION IS DONT "GIFT" THE AMOUNT OF 30LAKHS

1) IF YOU DO SO, YOUR RS.30 LAKHS CAPITAL SHALL BE ERODED

2) NO TAXATION ON YOUR SONS SUCH INCOME OF 30LAKHS.

THE BEST TAX PLANNING SHALL BE WHERE YOU AND YOUR SON, NOT ONLY WHEN ESCAPE FROM TAX LIABILITY BUTSAVE SOME EXISTING TAX LIABILITY:

HOW?????

OBSERVE THIS:

1) ADVANCE 30L AS AN UNSECURED LOAN FOR ACQUISITION OF HOUSE TO YOUR SON

2) LET HIM PAY YOU INTEREST ON THAT ON SAY 10-12%

3) HE THEN CAN CLAIM THE INTEREST AS DEDUCTION U/S 24 OF HOUSE PROPERTY.........

ANY HELP REQUIRED..............PLEASE BE FREE TO CALL ........08822379122

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CA Preeti Agarwal (article) (844 Points)
Replied 04 June 2012

thanks to all learned person !! i too got to learn it !!!

sandeep goyal (1 Points)
Replied 15 December 2015

Dear Mr Bhattacharjee, Agreed strongly with your point where your solution gave tax free gift Plus tax benefit of unsecured loan. But what if the son borrows some amount from bank as loan also, can he still claim deduction on both loans- bank loan & unsecured loan?