Loan to parents and it's income tax implications
This query is : Resolved
Zaffar Rameez Siddiqi
(Querist)
30 July 2016
In FY 15-16 I had lent 10 lacs loan to my father directly transferred from my account to his account. I have already filled returns for the same and declared it in my itr and paid taxes for that.
He wants to repay part of that loan to me in FY 16-17.. Say 5 lacs through same account.
My queries
1. Should it be declared in my father's income in FY 15-16?
2. will he be levied any taxes for that loan?
3. When he repays it in FY 16-17 should I declare it again in my " income from other sources" and then claim exemption?
Or should I use gift provision??
Kindly reply with your valuable opinion and suggest any alternate routes to be taken to be transparent and avoid any IT noticed.
Thank you
He wants to repay part of that loan to me in FY 16-17.. Say 5 lacs through same account.
My queries
1. Should it be declared in my father's income in FY 15-16?
2. will he be levied any taxes for that loan?
3. When he repays it in FY 16-17 should I declare it again in my " income from other sources" and then claim exemption?
Or should I use gift provision??
Kindly reply with your valuable opinion and suggest any alternate routes to be taken to be transparent and avoid any IT noticed.
Thank you
CA Mohit Bansal
(Expert)
30 July 2016
At the very first instance you should not have shown loan from father as your income in that year's return and hence there would not have been any tax liability on the same. Nevertheless if you have paid tax on it, it can be claimed as refund now
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30 July 2016
There is a straight distinction between an income and a loan. A loan is always capital item unless expressly provided by the Income Tax law as taxable.
Secondly, if you had a source to pay the loan to your father in the FY2015-16 for rupees ten lakhs and at the same time if your father also has the source to repay rupees five lakhs in the FY2016-17, there is no problem of tax in both of your hands.
Source may be from income after payment of tax, a loan, withdrawal of capital from a business, receipt against salary, interest, share of profit from a partnership business, receipt from any lending, gift, .....etc. which is accumulated in your bank account or cash as recorded in your books of account, if any maintained by you.
Secondly, if you had a source to pay the loan to your father in the FY2015-16 for rupees ten lakhs and at the same time if your father also has the source to repay rupees five lakhs in the FY2016-17, there is no problem of tax in both of your hands.
Source may be from income after payment of tax, a loan, withdrawal of capital from a business, receipt against salary, interest, share of profit from a partnership business, receipt from any lending, gift, .....etc. which is accumulated in your bank account or cash as recorded in your books of account, if any maintained by you.
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Zaffar Rameez Siddiqi
(Querist)
30 July 2016
Thanks fort your replies sir
But to put it properly i want to clarify that is not meet who received loan but I am the lender to my father which he will repay now.
Now, should he declare 10 lakh rupees in his income? And then claim exemption
If yes, which is the section applicable??
Once he repays it to me should I declare it in my income?? Whether it will form a part of my total income?
But to put it properly i want to clarify that is not meet who received loan but I am the lender to my father which he will repay now.
Now, should he declare 10 lakh rupees in his income? And then claim exemption
If yes, which is the section applicable??
Once he repays it to me should I declare it in my income?? Whether it will form a part of my total income?
30 July 2016
Please read my above reply carefully. You will come to know the solution for even your second query.
Zaffar Rameez Siddiqi
(Querist)
30 July 2016
Thank you sir.. But my question is whether to declare or not?? Should I show it in my total income or not??
CA Mohit Bansal
(Expert)
31 July 2016
You dont need to show in your incoe the amount of loan received
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