Cash gift to relative(mother, father or brother)

Mihir (Wealth Manager) (5293 Points)
Replied 05 December 2013

No, there is no problem in receiving gifts at the time of marriage. It is tax-free. He and his wife may gift to father, mother, brother, sister etc. It will help if he makes proper documentation of such gifts received and given.

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vishnu kumar (MBA) (60 Points)
Replied 05 December 2013

Thanks Mihir for your quick reply.

Can u elaborate my point number 3 and 4 respectively.

Thanks

Mihir (Wealth Manager) (5293 Points)
Replied 05 December 2013

1) Yes, he can give cash gifts to father/mother/brother, and the same shall be tax-free in the hands of father/mother/brother.

2) The gift received in their hands shall be tax-free.

3) That does not apply here. The banks shall be hesitant to accept large cash deposit for their own reason and nothing related to income tax. You may deposit in small portion or deposit it in the locker.

4) He may hold this cash, invest, spend, anything he likes.

Note: Prepare proper documentation for these gifts. If ITO raises questions and not satisified with your oral explanation, then whole amount shall become taxable.

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poonam verma (Company Secretary) (191 Points)
Replied 05 December 2013

Can a salaried employee make gift of cheque to his/her blood relative. If yes, how much can be the amount and what caution should be taken while giving cheque. The donor is getting tds deducted from his salary. Pls advice,

Thanks

Poonam

vishnu kumar (MBA) (60 Points)
Replied 05 December 2013

Do we need to show in some documents to hold cash ? As the person is salaried, how should he prepare balance sheet ? Any example and format will be of great help.

More over, he got this in last feb 2013 but he s holding in cash only(No money generated).

If he put it in bank and get interest , will he liable to pay Tax ?

If he purchases mutual fund/ bond, how the tax liabilities will be applied ?

As i am novice to income tax legalities , explaining in more words will be better.

Thanks in advance.

Vishnu kumar

CA Srikanth Yadav (Chartered Accountant) (3162 Points)
Replied 06 December 2013

Originally posted by : poonam verma
	Can a salaried employee make gift of cheque to his/her blood relative. If yes, how much can be the amount and what caution should be taken while giving cheque. The donor is getting tds deducted from his salary. Pls advice, Thanks Poonam

I'm assuming, by "blood relative" you meant spouse or brother or sister or any lineal ascendant or descendant. In that case, regardless of whatever the gift may be, it shall not attract any tax. And there isn't any limit as to the maximum amount that you can give gift, if it's to a relative.

CA Srikanth Yadav (Chartered Accountant) (3162 Points)
Replied 06 December 2013

Originally posted by : vishnu kumar
	Do we need to show in some documents to hold cash ? As the person is salaried, how should he prepare balance sheet ? Any example and format will be of great help. More over, he got this in last feb 2013 but he s holding in cash only(No money generated). If he put it in bank and get interest , will he liable to pay Tax ? If he purchases mutual fund/ bond, how the tax liabilities will be applied ? As i am novice to income tax legalities , explaining in more words will be better. Thanks in advance. Vishnu kumar

Unless you carry on a businees/profession, there isn't any need to prepare books of account (even in case you carry on a business/profession, you may not be required to prepare books of account subject to the limits specified u/s 44AA).

If the cash is deposited in F.D.s, the interest on the same shall be subject to tax (T.D.S shall be deducted @ 10% if the interest amount exceeds Rs. 10,000 in a financial year).

If it is invested in Mututal funds, you're eligible for deduction u/s 80C (upto Rs. 100,000). Regarding Bonds, it depends on what kind of bonds you're talking about. If the bonds are of an eligible public company or a public financial institution, the same shall also be eligible for deduction u/s 80C (upto Rs. 100,000)

I hope this helped.

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