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Account and tax treatment of gift from father to son via cheque

Permashwar Killa (Senior Associate Consultant) (27 Points)

29 May 2017

I need to know the Accounting and Tax treatment of the gift provided by Father to Son(both been individual) via Cheque amounting Rs. 3,00,000 without any special occasion(like:- Marriage, Birthday).

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PRABIR PAUL (*****Accountant***** Never insult to any person for any kind of lack of knowledge or misread.) (1443 Points)
Replied 29 May 2017

According to section 56(2)(vii) Father is fall under the defination of relative.

Income received from relative is exempt whether the amount is 3,00,000/- or 3 Crores whatever.

So your income is not subject to Income Tax.

1 Like

Poltu Ghosh (Job) (1865 Points)
Replied 29 May 2017

but clubbing provisions will hit on income that accrues from the gifted asset

Kushal Pande (CFO) (256 Points)
Replied 30 May 2017

Originally posted by : Poltu Ghosh
	but clubbing provisions will hit on income that accrues from the gifted asset

Only if son is minor on the date of gift.

Clubbing of Income of a Major Child (18 or more than 18 years old)

You may be giving over some money to your major child, in this case if the major child invests that money – any income from these investments will not be taxable in your hands but will be taxed in the hands of the major child. So therefore, there will be no clubbing of income in case of a major child.

PRABIR PAUL (*****Accountant***** Never insult to any person for any kind of lack of knowledge or misread.) (1443 Points)
Replied 30 May 2017

The provision of Clubbing is only applicable if the intention of this gift is to avoid income tax.

But please go through a logic...

If a person is fall under the provision of clubbing and he don't declare it for clubbing..

How the department will be able to know that the person is liable to pay income tax on clubbing provision untill his book of Accounts not to be called for Scrutiny U/s 143(2). Whether department never ever track your bank account...

PARDEEP KAPIL (DIRECTOR) (150 Points)
Replied 30 May 2017

Dear Friends : A father can gift any amount of money to his son PROVIDED that father has not taken a loan to make a gift and his capital shouuld be more than gift. In other words he must have paid income tax on such gifted amounts