My fathers gifts me huge amount. Do I need to pay tax on it.

I am in the process of opening Coaching Institute. My fathers wants to deposit Rs 15,00,000 in my bank account. 
- Now will it be considered as an Income and I have to pay tax on it . I do that know, I may have to pay tax on the interest that I earned.
- He will depositing the money through check. But how the Income tax Dept will know that Rs 15,00,000 is a gift not an earning and not to expect tax on it .Is there any formality that I have to do.
Asked 5 months ago in Income Tax from Solan, Himachal Pradesh
Dear Sir,

Happy Diwali!!

Your father can gift you the money and it will not be taxable.

It is recommended that you prepare a gift deed to document this.

Further, if you are a major, clubbing provision will not be applicable and income earned from that money will be taxable in your hand. Accordingly, interest will be taxable in your hand.

Please feel free to call/revert in case of any doubts

Thanks and Regards
Abhishek Dugar
CA CS B.Com
Caabhishekdugar@gmail.com
Abhishek Dugar
CA, Mumbai
1083 Answers
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First whether your father is paying that amount from his taxable income.

If yes then you can take it as loan or if gift then he will execute a gift deed
Shyam Sunder Modani
CA, Hyderabad
1183 Answers
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Hi, 
happy Diwali!
you need to show this as an exempt income while filing your IT Return.
you can get gift deed done of the amount you get from your father. gift deed in a simple plain paper is sufficient.

Simple format of deed:

GIFT DEED

KNOW ALL MEN BY THESE PRESENTS that I, _____________ S/o Sh.___________ r/o ____________________, transfers voluntarily, CASH OF value of which is Rs._____________ (Rupees_____________ only) to my SON/HUSBAND/SON IN LAW / Friend SRI.____________ S/o of Sh._________________ (hereinafter referred to as "the donee") To Hold the same to the donee absolutely forever. I further declare that the said gift has been made by me out of my natural love and affection for the donee and the same has been accepted by the donee.

IN WITNESS WHEREOF, I have executed this deed this ________ day of __________.

Witness:






1.




DONOR




2.




DONEE



I, SRI. ______________, the donee hereby accept the gift.

MODIFY THE FORMAT SUITABLY BY ADDING THE AMOUNT AND CHEQUE/ D D NOS'
Vishakha Agarwal
CA, Bangalore
337 Answers
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Gift tax provisions should always be seen in conjunction with the clubbing provisions as laid down under Section 60-64 of I-T Act. These sections deal with the cases where taxpayer uses the gifting process as a means of transferring the tax incidence on other person, but actually the income is being enjoyed by the transferor.

As per gift tax provisions, gifts received from blood relatives (spouse, parents, your and spouses' siblings, maternal or paternal aunts and uncles and their spouses, brothers-in-law and sisters-in-law), or on the occasion of wedding and also as inheritance through Will, will be tax-free in the hands of receiver. But clubbing provisions have laid down few instances where the income generated from the gift or transferred income will be clubbed back in the income of transferor. 
Vishakha Agarwal
CA, Bangalore
337 Answers
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Hello Sir,

No Tax shall be payable on the amount received by you from your father. On a safer side it is advised to prepare a Gift Deed in case the department asks for the same.


Trust this clarifies your query. 

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

Thanking You. 

Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Rohit R Sharma
CA, Mumbai
1080 Answers
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Hello Sir,

If gift is received from any relative (Defined u/s 56) then it is  not taxable under head 'Income From other Sources" but while calculating income generated from gift we have to keep in mind the clubbing provisions.

Mostly clubbing provisions are applicable in case of Minor child,Wife, Son's Wife.
In your case clubbing provisions are not applicable. therefore Income earned from that money will not be clubbed with income of your father.

It is recommended that you should execute a gift deed to document this.

For any further clarification feel free to contact us. 
 
Shiv Kumar Agarwal
CA, Delhi
197 Answers
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