Gift in Savings account or current account for businesses

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For a jewellery business owner receiving a gift from a blood relative, it's generally advisable to deposit the funds into a savings account. This is because a gift is considered a non-business transaction, and a current account is primarily for business entries. While the funds may later be used for business purposes, the initial receipt is best handled in savings. For business loans, whether from a relative or a bank, the funds can be received in either a savings or current account, as the accounting treatment within your business books will determine how it's recorded.

Yogeshvaran

Yogeshvaran (Querist)
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03 May 2024 I am running a jewellery business and my blood relative is willing to gift me Rs.6L. From income tax perspective should I receive the money in Current account or Savings account. Why?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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03 May 2024 take it in savings account.

Yogeshvaran

Yogeshvaran (Querist)
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03 May 2024 Why in savings account and not current account because anyway I am going to use the gift for my business.

Yogeshvaran

Yogeshvaran (Querist)
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03 May 2024 By the way thank you for your answer. Pls consider and answer my above question also. Thanks

Yogeshvaran

Yogeshvaran (Querist)
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03 May 2024 And if in savings account I receive huge sum of money will it not be scrutinized by itr... Thanks.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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03 May 2024 Think about what your current account is for? To account for business entries. A gift is a non business transaction. Hence, you should ideally put it in a saving account. Whether you use it as capital for business purposes later on, is a separate issue.

Yogeshvaran

Yogeshvaran (Querist)
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04 May 2024 Thanks so much. It helped me a lot...

Nikhil Kaushik

Nikhil Kaushik (Expert)
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04 May 2024 you are welcome Yogeshvaran:)

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Yogeshvaran

Yogeshvaran (Querist)
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04 May 2024 Hi Nikhil Kaushik,
I have one more doubt.
If I were to get loan for business from a blood relative. Which account should I use? and also if the loan was from bank which account should I use? Thanks again..

Nikhil Kaushik

Nikhil Kaushik (Expert)
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04 May 2024 wont make much difference as such. But if you are using funds for business purposes, then better to take in current account only.

Yogeshvaran

Yogeshvaran (Querist)
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04 May 2024 Thanks a lot brother!

CA Puja Sharma

CA Puja Sharma (Expert)
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08 May 2024 You can take the loan in either current or savings accounts as per your convenience. SInce your business is a proprietorship firm, you can account for the loan as business loan even if you receive it in your savings account. The treatment in the books of accounts of business will matter.

Yogeshvaran

Yogeshvaran (Querist)
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16 May 2024 Thanks a lot Puja for your reply...

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