Cash Gift

As Income tax provission any gift received from relative more than Rs. 50,000 it will exempted from tax.

Thanks for your reply.

But the question here is not that by whom and to what extent gift is exempt.

The question is whether a gift note in a plain paper by the doner, who is not an assesse would be sufficient to satisfy the IT department?  If yes, how to satisfy them regarding its source?

IF gift is taken from blood relation relative then it is not taxable othewise it is taxable ?

I think I have not been able to make you understand my point.

Let us understand it with the help of an example.

'A' is the doner, who has never been assessed to income tax, makes a cash gift to his son 'B' by way of a gift note in a plain paper. Now 'B' is filing his return of income. If at the time of assessment of the said return of 'B' the question arises regarding the taxability of the said gift, can it be possible to produce the gift note to the AO as evidence to satisfy him regarding the source of the same.

Also, how to satisfy the AO regarding non taxability of the same in the hands of 'A' as said earlier that 'A' is not an assesse because his income never exceeded the exemption limit.

Dear sir

As per income tax provision the gift in the hands of the Mr B is not taxable as he is receive the same from his relative.

1.But if the Assement is made on Mr. B then B has to prove that he has received the gift from his father by not merely showing the Plain paper gift deed it should be in Registered paper of Gift deed. The source of income must be genuine.

2. As Mr A 's Total income does not exceeds the basic exemption limit then he is also does not liable to Tax. But he must be file nil return showing his source of income.

If am I wrong let me know.

Dear Umesh,

The ITO may ask you to prove the capability of Mr.A to make the gift.Since the gift is genuine,you can provide the bank statement of Mr.A showing the debit entry for the gift and also,if possible,Mr.A's Capital A/c statement to establish that he is indeed capable of making the gift from his resources.The mere fact that Mr.A has not filed a return because he is not required to do so or that the gift note has been made on a plain paper(there is no requirement to register the gift deed) should not be impediments to prove the genuineness of the transaction.

Dear Balaji,

Thanks for your valuable inputs in the dicussion.

If Mr.A do not have any bank A/c or if the gift is given out of cash-in-hand, then whether the Capital A/c statement and gift note are sufficient evidence. 

gift received from realative more than 50000 is exempted

First of all, any cash gift from Relative is completely exempted.