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Capital arrangement

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Querist : Anonymous

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Querist : Anonymous (Querist)
27 March 2012 Dear sir,
I am proprietor of a gas agency . At initial stage of business, during fy 2011-12, my father provided me Rs. 9 lacs in cash (which was the gratuity amount of his retirement) for the needs of business. Can I show the said amount as interest free loan or as a gift is better option to avoid tax liability in AY 2012-13.
Please advise me.
Thanks and regards.
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CA Siddhartha Bhardwaj

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CA Siddhartha Bhardwaj (Expert)
28 March 2012 You can show it either as a loan or a gift. There is no tax implication in both the cases.

Gift is exempt since it has been received from a relative.

If you have to return the amount to your father, then show it as loan.

If you do not have to return the amount, then show the same as gift.

However, make sure that your father can substantiate the source of the amount given to you.
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