Payment through friend account

1. Please make the repayment through net banking or account payee cheque.

2. No

Hi,

Hope you are doing well !!

Gifts from family members are not taxable, neither are the loans.

But any gift above Rs 50,000 from a friend (non-relative or anyone who falls outside the definition of 'family' under the Income Tax Act) during a financial year is taxable.

It will be considered as income from other sources. You will have to pay tax on it as per applicable rate.

However, as per recent budget, there is no tax liability on income upto INR 5 lakh.

Also, if it's a loan (with or without interest), it becomes tax-free.

So,if your friend gifts you Rs 2,00,000, you have to pay tax on the amount, but if it is a loan that you will be paying back, there will be no tax on it.

Also, As reading of Section 269ST no detail given regarding Gift, As understanding of section Gift may be given any amount of Cash.

Hello,

1. Levy of penalty would depend upon many other things. Better to make payments through the banking channel to avoid any issue in the future.

2. No tax will be applicable.

I hope that this answer satisfies your requirements.

Regards,

CA Hunny Badlani

The income tax laws have several penal clause for discouraging cash transactions.  

Cash dealing over 20,000 can allow the tax department to levy penalty. Further if u don’t disclose the source of income in cash you have further penalty on undisclosed income wit tax and interest. 

Gift from friend is taxable unless taken on marriage. U have a tax liability on gift of 2 lakhs given to you. I

- In both the cases, it is not gift. Tour packages are not capital assets. 

- It seems that either you or your friend  have received a compliance notice from the Income tax to reply for high value transactions and yours ITR is not supporting the facts. 

Tickets from IRCTC wont be gift as its not included in definition of capital asset as per section 2 or section 56.

The second one also wont be covered under gift.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Considering the amount involved, it doesnt seem to be material and one can argue that its not a loan but reimbursement of expenses. I don't foresee any issue considering the00 materiality.

In second scenario, income tax on gift is applicable only with respect to certain movable properties, immovable properties and cash. Hence, apparently it can be argued that sponsered trip does not come under the definition of gift.

No, you would not be required to pay any gift tax.