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Tax implications on Tuition fees

deep1976 (propreitor) (281 Points)

17 April 2025

resp members

one query pls can a friend of my mine pay my son school fees on my behalf as i am short of some funds..

what tax implications are there..pls guide..

i will repay him afterwards

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Rama chary Rachakonda (Master in Accounts & high court Advocate email ID:ramachary64@gmail.com voice no:9989324294) (7320 Points)
Replied 17 April 2025

Paying School Fees through a Friend Yes, your friend can pay your son's school fees on your behalf.

This transaction is considered a personal loan or financial assistance from your friend to you.

Tax Implications There are no significant tax implications for you or your friend in this scenario, as long as: - *It's a genuine loan*:

The payment is considered a loan, and you intend to repay your friend. - *No interest or reasonable interest*: If your friend charges no interest or a reasonable interest rate, it won't attract any tax implications.

Key Considerations - *Repayment*: Ensure you repay your friend as agreed upon to avoid any potential tax implications or disputes. -

*Documentation*: Consider documenting the loan agreement to avoid any misunderstandings.

Gift Tax Implications If your friend doesn't expect repayment, the payment might be considered a gift.

In that case: - *Gift tax exemption*: Gifts from friends are taxable in the hands of the recipient (you) if they exceed the exemption limit under the Income-tax Act.

To avoid any potential tax implications, it's essential to treat the payment as a loan and repay your friend accordingly.

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deep1976 (propreitor) (281 Points)
Replied 17 April 2025

Thanks A lot Sir For Prompt Reply And A Writing a Vast Details Regarding The Matter ..Thanks a Lot Once again.

My Frd Doesnot Wants To Show a Loan Towards This Amt To Me But If Its A Gift Then I Am Liable To Pay The Taxes Income from Other sources..

Can He Show Withdrwals In His account Without Any Complications Samj Lijiye a short Of Charity For Me..

If I Capable After Some Time I will pay him a Little Bit Of That Amount...

Pls Advise..

Gautam Bothra (Chartered Accountant) (22 Points)
Replied 17 April 2025

If the amount is upto or less than INR 50,000 (for the entire financial year), you will not be liable for tax under Income from other sources. However if you intend to return this then it is adviced to reflect this as a loan rather than a gift.