My friend is paying for my travel trip... he and me both r going to travel for holidays and he is going to pay my whole trip include package hotels etc... do i have to show the amount spent on me as gift in income tax return and pay tax on it? If yes than how could i able to figure out my expenditure as both expenditure on both is combined.. if wont show that amount in itr than what will be the consequences as iam not willing to travel he is forcing me to do so do i have to pay gift tax on it?
Nice friend first of all.
But since it's just for holidays and you are not going to reimburse him anything or he is not going to claim it as expense since it's a personal trip so don't show it anywhere.
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Thank you
Dear Sir,
Hope you are doing well !!
No, you don't need to show it anywhere in ITR.
No, you don't need to pay any tax on it.
It is a capital receipt not an income.
Hi
You may let go such receipts and there is no need to show these in your ITR. There's nothing credited in your account. It's just that someone is bearing your expenses. It shall not be considered as an income or gift.
Hii
1. in a FY upto Rs.50000 gift is tax free u/s 56, thus you can show the same as gift in capital account and same show as drawings.
U all r confusing me... its legal to take this trip? Or it will create problem for me in future? Acc to IT act of gift received is greater than 50000 than it will attract tax... so the trip amounting greater than 50000 will attract tax from me? Capital receipts means? Let us take an example .. suppose my friend is paying my electricity bill of my house amounts to greater than 50000 than it will attract gift tax from me..? Likewise than this trip should also attract gift tax as he is all paying me expenses... plz clarify in detail all the issuses
Tax on gift is applicable when the gift is in form of cash, immovable property or any other property, where property means:
(i) immovable property being land or building or both;
(ii) shares and securities;
(iii) jewellery;
(iv) archaeological collections;
(v) drawings;
(vi) paintings;
(vii) sculptures;
(viii) any work of art;
(ix) bullion;
However, in your case, there is no receipt at all. No tax needs to be paid.
Hi,
No, you are not required to show the same in ITR.
There will be on tax liability on the same.
This won't be taxed as gift because any receipt can be taxed as gift only if it's cash or immovable property or various movable property mentioned in section 56.
Since your free trip is not getting covered in any of the above list you don't have to pay any gift tax.
Thank you.
Yes, it is legal.
It will not create any problem in future.
As per the Income Tax (1) Act, 1961, if the value of gifts received, is more than Rs. 50,000 a year, then such amount is taxed as income in the hands of the receiver. These gifts may be in any form – cash, jewellery, movable and immovable property, shares etc.
Since, your trip is not covered any of the above list. There is no need to worry.
So if my electricity bill paid by my friend which is more than 50000 ... than it will amount to gift in this? And also car and electronics equipments also doesnt fit in any head of sec 56 property definition... therfore it wont be considered as tax free under gift received?
No it won't be taxed as gift.
Neither the car or electronic item will be taxed as gift.
If you need any help in filing ITR do let me know.
Thank you
Hi
No tax will be payable in this case .
No need to show this in ITR .
Hope it helps
Neither the electricity bill nor the car or equipment shall be considered as gift. These will be non taxable.
However, you won't be allowed to claim deduction of any such expenses.
Neither the car or electronics item will be considered as gift.
These will be non taxable.
Hi No worry.. nothing to show in ITR as nothing is actually getting into your account and another one is expending on you. and it is his personal expenditure.. therefore you don't have to do anything in ITR and it's legal too..
