So a friend helped another friend in Kind during bad times with intangible things like food & place to stay even money which has been returned. Now that friend got a some inheritance so he wants to share it with this other friend who he considers as a brother.
Now if he transfers the money from his savings account to the friends saving account(which is linked to GST number that the friend uses to bill clients and also receives clients money in that account with some personal stuff like gift from parents etc) now is GST applicable to it.
This is not like a return of loan but just sharing an amount with a friends as a brother would share inheritance.
The receiving friend was concerned and asked me because his CA told him that if any amount comes to your account linked with GST it will be taxable under GST so don't accept any other money except business in that account. Or to reactive current account or open new one and then link that with GST.
The CA said still when large amounts come to your Savings account it will come under scrutiny.
So I thought of posting here to help him. The reason I have doubts it because I know many people who transfer one time payments which are small to their vendors relatives accounts to avoid GST like in mothers name who has no income so income tax also. Then the mothers transfers to their account as gift.
There was an AC repair guy who used to tell me to deposit the money to savings account that is small amounts of upto 5000 to avoid GST while when buying AC with Bill he accepted the money in his Current account.
So to sum up
1. Will GST be applicable on a large amount like 5 lakhs or even 5 crores when a friend gives a gift to another.
2. If GST is not applicable but will attract scrutiny since it is a large amount is this accepted gift between friends accepted as a valid reason by GST auditors? I am sceptical cause if it is allowed then I am sure a lot of people to avoid GST will gift money as a friend to their vendors Wife or other immediate relatives.
Thank you
Menu
IS GST applicable on gift between friends? One friend has a GST number and Savings Account is linked
Replies (1)
Lets name the receiving friend B and giver friend as A.
B receives the amount from A in his business current account. Now, is it a supply under GST?
No. because, money is neither goods nor services and thus, transfer of the same is not a supply under GST.
Now, regarding the tax planning.. since, GST is not applicable on money, lets think from Income tax perspective.
B has to pay tax on the sum received as it is a gift more than 50k.
Your AC guy refused to take whole amount in single bank account because GST is applicable on transfer of AC (being goods) and to avoid suspicion he asked you to do that.
B receives the amount from A in his business current account. Now, is it a supply under GST?
No. because, money is neither goods nor services and thus, transfer of the same is not a supply under GST.
Now, regarding the tax planning.. since, GST is not applicable on money, lets think from Income tax perspective.
B has to pay tax on the sum received as it is a gift more than 50k.
Your AC guy refused to take whole amount in single bank account because GST is applicable on transfer of AC (being goods) and to avoid suspicion he asked you to do that.
Recent Threads
- Excess Payment on RCM
- AOC4 auto population of previous year data
- Exports against INR PO payable by Domestic Company
- Which websites are best for government exam prepar
- TDS on maturity payment of LIC of india
- ITR2 Gold ETF short and long term
- Query under faceless assessment
- Purchase of business
- Refund of ITC for advance paid to overseas supplie
- Clubbing query (when gifts given to multiple fami
Related Threads
CAclubindia
