• Tax on online transaction between brothers

I have taken total 9.5 lakh from brother through online banking in fy 2017-2018( 2.5 lakh on 4-april-2017, 2 lakh on 10 may 2017, and 5 lakh on 18-dec-207). All the transaction are through online banking. Then I have returned back 9 lack to my brother through online banking on 1-jan-2018. As per my knowledge all above transaction are non-taxable events( Gift or either interest free loan). I and my brother have not made any GIFT deed for the above transactions. Is it compulsory to make GIFT deed for online banking transaction in blood relations to show as gift.
Asked 3 years ago in Income Tax

It is always advisable to make gift deed to be on safer side although it is for blood relation

Vidya Jain
CA, Kolkata
953 Answers
48 Consultations

4.8 on 5.0

Hi,

Since you have already return the money, it's not a gift but a loan.

It's better to treat it as a loan and you don't need to show it in your ITR anywhere unless any of you are having business income.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Don't consider it as a gift. Since repayment had been done, it could be treated as a loan. For the remaining 50000, gift can be shown. Show it as an exempt income in the income tax return.

Since the amount of gift would be 50000, it is advisable to get a gift deed executed. Or simple declarations from both of you can be prepared which shall be notarized.

Lakshita Bhandari
CA, Mumbai
5557 Answers
649 Consultations

5.0 on 5.0

No, 57000 would not be your income. It's only a repayment of loan. Pay taxes on 12 lacs only.

Lakshita Bhandari
CA, Mumbai
5557 Answers
649 Consultations

5.0 on 5.0

Regarding your 1st ques.

It isn't compulsory for the gift deed. Unless the terms between both are clear.

2nd one

Itge ques is not cleared. If it's like you gave 100000/- and will receive back later in all, it won't be considered in tax, n so taxavle income will be 1200000/-

Stuti Shah
CA, Ahmedabad
3 Answers

Not rated

You have 2 options

1. Show it as business income

2. Show it as capital gains.

Selection of one of the options above shall depend on the intent, frequency and volume of transactions.

The loan transaction shall not be shown in ITR unless balance sheet is to be filed along with the ITR.

We may assist you with return filing.

Lakshita Bhandari
CA, Mumbai
5557 Answers
649 Consultations

5.0 on 5.0

It is not compulsory to draw a gift deed to enjoy the exemption under Income tax. Looking at your transaction, You have returned the money to your brother. The transaction is an unsecured loan which has been returned in part. There is no need for a gift deed. It is not a gift when you return the money back to your brother. You may treat this transaction as unsecured loan.

On the other hand, do you intend to return 57000 to you friend? If yes, then you should not include the amount in your total income and the taxable income remains at 12 lakhs.

However, if the amount represents gifts from friend and you don’t return it to him then you shall add the amount to your total income which come out to be 12.57 lakhs.

Also, if I assume that you have received this amount from mor than one friend and none of your friends have transferred your more than 50,000/- in one year, none would be taxable and your income would stand at 12 lakhs. (Exemption under income tax up to 50,000 per person for gifts)

Sidhant Arora
CA, Delhi
10 Answers

5.0 on 5.0

No you don't need to show Transaction with your brother in your return of income.

You just need to show capital gain in your ITR.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Hi,

In your case, since you have already returned 9 lakhs via online mode, there is no question of gift. The remaining 50k can be considered as gift from brother which is again tax free. There is no mandate to prepare a gift deed for this transaction.

Regards,

Nikhil.

Nikhil Khanna
CA, Mumbai
1428 Answers
19 Consultations

4.8 on 5.0

Regarding your 2nd question, it is not clear whether the friends partly repayed the amount you paid or was it a loan they gave you.

Considering it was a repayment of the amount you paid, you should pay tax on 12 lakhs only.

Regards,

Nikhil

Nikhil Khanna
CA, Mumbai
1428 Answers
19 Consultations

4.8 on 5.0

Hi,

You need not show the details of the transactions with your brother in the ITR. you can show the 12 lakhs as capital gains and file your returns accordingly.

Hope that clarifies.

Regards,

Nikhil.

Nikhil Khanna
CA, Mumbai
1428 Answers
19 Consultations

4.8 on 5.0

Yes assuming you have sold entire stock, 3 lakhs will be capital gain.

You have to show the capital gain by providing total purchases and total sales figure.

Vidya Jain
CA, Kolkata
953 Answers
48 Consultations

4.8 on 5.0

1) Transaction of RS. 9.5 lacs between you and your brother may be treated as unsecured loan without interest. No need to show such amount in ITR.

2) You need to pay tax on RS. 12 lacs if 1 lac is given out of 12 lacs. 1 lac can be treated as loan if 43k will also come back.

3) RS.12 lac will be treated as capital gain or business income depending upon other factors. You need copy of contract notes,ledger maintained with the depository to calculate and substantiate such figures. Retain them for future reference.

Thanks

Vivek Kumar Arora
CA, Delhi
4222 Answers
399 Consultations

5.0 on 5.0

Hi,

It depends on how you treat your investment in Stock Market, If you are treating it as business income then you can show it as closing balance of Rs 50000 as loan taken from relative in your balance sheet.

if your are showing it as capital investment,then there is no requirement to show the sources of income.

But the treatment of the money is important, if you want to treat it as gift,then you are required to show it as exempt income.

if the amount is treated as loan then there is no need to declare it unless you are showing your investment in business income (as mentioned above).

Gifts from non-relatives are tax exempt up to maximum of Rs.50000 for a financial year. If you receive the gift worth more than Rs.50000, you are liable to pay the tax whatever you received excess of the limit. This rule applies when the gift is a sum of money, whether in cash, by way of cheque, bank draft or any articles which is value more than the Rs.50000.

so if the money you recd from your friends is in the nature of loan return then it is not an income while considering the taxable income.

if you have any doubts feel free to reach me.

Vishakha Agarwal
CA, Bangalore
448 Answers
85 Consultations

5.0 on 5.0

Hello,

No it is not mandatory to prepare a Gift Deed, but it is always advisable to make one for your own records and safer side.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, FCA, LLB, CERT. FAFP

Rohit R Sharma
CA, Mumbai
2104 Answers
95 Consultations

5.0 on 5.0

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