Adjustment of advance received as Gift from relative

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You received Rs. 7.00 Lac from a relative in FY 2019-2020, initially recorded as an advance. You're asking if it can be reclassified as a gift in FY 2021-22. While possible, it's advisable to consider a gift deed, as the amount may still be taxable unless the relative falls under specific tax exemptions (Section 56(2)).

Mahabir Prasad Agarwal

Mahabir Prasad Agarwal (Querist)

26 April 2021 Rs.7.00 Lac was taken by me from one of my close relative vide Bank cheque during FY 2019-2020,which was shown by me as Advance received. and the payer showed it as Advance paid . Whether the said advance received may be shown by me as Gift received during FY 2021-22 as agreed by the payer ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

26 April 2021 Yes, it can shown as gift received.

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CA. Aditya Goel

CA. Aditya Goel (Expert)

27 April 2021 it can be shown as gift but shall be taxable unless this relative is covered u/s 56(2)
would suggest to get a gift deed - not mandatory but advisable.

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