Gift to relative

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This query is : Resolved

Paras Gupta (Querist)

15 June 2009 Hi

Mr X is constructing his own residential house. His brother is willing to gift him Rs 20 lacs for the above purpose- 50% in cash & rest through cheque.

Is the entire 20 lacs exempt from income tax as gift from relative?
Should they enter a gift deed??
Is this much cash as gift acceptable??

Plz guide

Aditya Maheshwari

Aditya Maheshwari (Expert)

15 June 2009 If brother of X is having so musch cash in hand in his books of account then he can gift gift of any amount to his brother. The only condition is the source must be genuine. If he has so much cash in hand in books then why not deposit in bank and give cheque to Mr. X.
Gift deed should be entered on Rs. 100 stamp paper.

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Paras Gupta

Paras Gupta (Querist)

15 June 2009 Thanx for reply..

Does that mean that entire 20 lacs is exempt in hands of Mr X??

As per sec 56(2) any money gifted to relative is exempt. But I am concerned about the amount.. As amount is very big to be gifted by an individual, can it create any problem in future from any legal point of view??

Aditya Maheshwari

Aditya Maheshwari (Expert)

15 June 2009 See if the source of gift given by brother of Mr. X is proven and there are supporting documents like gift deed then any amount received from a relative (as defined in section 56(2)(vi)) will be exempt from any tax.
The said amount could have been Rs. 1 crore but the same would have been tax free if the above conditions were satisfied. Kindly take a copy of the bank statement of the brother when payment of the same is completed for future reference and if possible the same should be paid by cheque.

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