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Evidence of gift ??

AMIT (bus) (444 Points)

28 March 2015

Mr. A & Mr. B are real brothers.
Mr. A Receive Gift from Mr. B(USA) of Rs.50000/- Every month in his bank account.

Query are as follows :
A. Documentation that can be prepared for future for AO Satisfaction?
B. Taxability issue ?

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7 Replies

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 28 March 2015

Hello,

Gift received from Relatives is fully exempted from the levy of tax and no income tax would be levied on such Gifts. To remove any confusion regarding the classification of Relatives, the Income Tax Act has very clearly laid down that only the following would be treated as relative for the purpose of claiming exemption from payment of Gift Tax:-

Spouse of the Individual
Brother or Sister of the Individual
Brother or Sister of the spouse of the Individual
Brother or Sister of either of the parents of the Individual
Any Linear ascendant or descendent of the Individual
Any Linear ascendant or descendent of the spouse of the Individual
Spouse of the person mentioned above

There is no maximum limit on the value of gifts received to be exempted from Gift Tax. All gifts received from relatives (irrespective of value) are exempted from the levy of Gift Tax.

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 28 March 2015

It should be noted that the non-resident person making the gift may face tax consequences in his local jurisdiction(USA).

J. K. Ratan (Compliance Advisor) (794 Points)
Replied 28 March 2015

Agreed with Mr. Vishal Goel

AMIT (bus) (444 Points)
Replied 28 March 2015

Thanks Experts for attending the query.

I would like to know whether any evidence are required to prove that the subject transfer was merely a transaction of gift in the eye of AO whenever the same is challenged ?

D VARA PRASADA RAO (Student (Articles Completed)) (173 Points)
Replied 29 March 2015

Helloo...,

Agree with the experts reply...

Coming to documentary evidance... it's better to take the gift deed either on non-judicial stamp paper / plain paper from your Brother to face the future problems and to proove the geniuneness of the transactions... before the AO...

One more strong suggestion is that it is better to obtain the PAN Card and the Assessment Order / Income Tax Returns & statement of affairs of the Person who is gifting.... which supports you to prove the source of the person who is gifting you (i.e. Donor)....

I hope this information will be help to you...

Warm Regards

Varaprasad D

varaprasad21410 @ gmail.com

CA Shailesh Urdhwareshe (Sr. Partner) (95 Points)
Replied 06 April 2015

Originally posted by : AMIT
	Mr. A & Mr. B are real brothers. Mr. A Receive Gift from Mr. B(USA) of Rs.50000/- Every month in his bank account. Query are as follows : A. Documentation that can be prepared for future for AO Satisfaction? B. Taxability issue ?

Your brother may make a combined declaration on annual basis every financial year. evidences to be kept on records are_i) your brother's financial credentials- whether he can afford to send you a gift of Rs. 5 lacs every month or not, ii) his tax clearances of USA revenue department confirming that he has paid all taxes due on the earnings made by him in USA. of course, as sugested, having PAN of your brother is advisable. unless he sends you a declaration of Gift, the money held by you will be either as custodian or as a loan.

CA Shailesh Urdhwareshe (Sr. Partner) (95 Points)
Replied 06 April 2015

Originally posted by : AMIT
	Mr. A & Mr. B are real brothers. Mr. A Receive Gift from Mr. B(USA) of Rs.50000/- Every month in his bank account. Query are as follows : A. Documentation that can be prepared for future for AO Satisfaction? B. Taxability issue ?