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Is Western Union taxable

28 November 2020

I have received money from my friend who lives in abroad as loan and that amount I'm going to repay in near future without intrest through Western Union txn ... What is the tax implications under income tax I have received money in 3-4 instalments .... Is I have to pay tax on amount received and is there any amount as TDS will be deducted or paid on behalf on Western Union ??

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13 Replies

ayusmita (Tax consultant) (5885 Points)
Replied 29 November 2020

As I don't know the country name I giving you example of us dollars if the gift amount exceeds usdollar 14000 your friend will pay the gift tax in US and you will pay the income tax on the excess amount above rs 50000
regarding western union they are exempted from paying tax in india

1 Like

rama krishnan (12234 Points)
Replied 29 November 2020

If the amount received is in the nature of loan then there's no tax implications. better get a confirmation letter from your friend that he's paid certain amount as loan @ some percentage interest. moreover it's always safer side some minimal amount as interest to strengthen the loan theory or else it'll be treated as amount received without consideration and will be taxable

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kavita raheja (38 Points)
Replied 29 November 2020

@ rama Krishnan & @ ayusmita amount is exceeding 50k ... and if I'm taking confirmation of loan from my friend than what would be the format like any legal stamped paper of that country or simply plain with sign .... and then also tax is implied then in which section and under what head ... as I was not working for that year .. no income source

kavita raheja (38 Points)
Replied 29 November 2020

amount is exceeding 50k ... and if I'm taking confirmation of loan from my friend than what would be the format like any legal stamped paper of that country or simply plain with sign .... and then also tax is implied then in which section and under what head ... as I was not working for that year .. no income source

rama krishnan (12234 Points)
Replied 29 November 2020

Since your friend is residing abroad presently, so executing loan deed is not possible. so confirmation in plain paper is suffice. for loan amount there's no tax implications

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kavita raheja (38 Points)
Replied 29 November 2020

And in which section it will be shown and under which head like Other source .... If I'm going to file itr 1 or 4

rama krishnan (12234 Points)
Replied 29 November 2020

No need to show under any head... just disclose in your balance sheet as unsecured loan

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ayusmita (Tax consultant) (5885 Points)
Replied 29 November 2020

What rama Krishnan sir says right it's not possible to draft a loan deed so you can make a personal loan agreement contract with your friends and the contract should include all the usual elements of a loan like amount , interest even if preferential or zero, principal, term, consequences of default and currency of loan

and in my opinion if you disclose this debt in your IT returns it will be good in future

1 Like

ayusmita (Tax consultant) (5885 Points)
Replied 29 November 2020

Fill itr 4 show in balance sheet as per sir said

1 Like

kavita raheja (38 Points)
Replied 29 November 2020

Thank you 😊 to both of you .... it's such a great help ... and I'm grateful to you both for such beneficial help ....

rama krishnan (12234 Points)
Replied 29 November 2020

Thanks welcome @ ayusmita ma'am and kavitha ma'am

1 Like

ayusmita (Tax consultant) (5885 Points)
Replied 29 November 2020

Welcome Kavitha

And Thank you rama Krishnan sir

shahyar husain (1235 Points)
Replied 03 December 2020

In a major relief to international money transfer giant Western Union, the Income Tax Appellate Tribunal (ITAT) has exempted it from paying income tax in India overturning an order of the Commissioner of Income-Tax (Appeals). I hope this helps.