O.Kay (none) 01 January 2013

Money transfer to non related person - gift tax?

Hello,

would appricate opinons on below situations.

Scenario 1

Man transfers large sums of money to woman (via bank transfer). Man & woman are not related.

Man is foreign citizen. Woman is NRI. Money transfered to woman's indian bank account (NRO a/c).

Does the woman have to pay gift tax in this scenario?

Is it worth pursuing a tax evasion petition?

Thanks in advance.

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6 Replies

Viswanathan (NA) 02 January 2013

Any money transfer to a non-relative is treated as income in the hands of the recepient of the money and taxpayable if it exceeds the threshold limit.

R.K.Viswanathan

O.Kay (none) 02 January 2013

Thank you for your response. I have few more questions...

(1) What would be the most effective way of reporting this (i.e. one tht would ensure the authorities follow up on)?

(2) Would me emailing the Directorate of Revenue Intelligence be of any use (see this link https://dri.nic.in/General/aspYouCanHelp.asp)? Do they even cover this sort of issue?

(3) Is it worth hiring a lawyer for this purpose? If I did hire a lawyer what sort of fees will I be looking at and also any well connected lawyer recommendations in Tamil Nadu?

(4) These transfers started since just before 2010, will Income Tax authorities look into tax returns from a few years back?

(5) Also, Man + Woman have purchase real estate in India (in the Woman's name). They have had some sort of secret agreement with the seller whereby on official sale documents they have listed a different price to what they actually paid the seller. i.e. price on sale deed is 10% of actual sale price. My understanding is that they have done this to circumvent paying stamp duties (?) and other government taxes (?).

Is deal normal? Or is there a way for me to report this and how do I go about doing it?

Any help would be appreicated. I am completely clueless about the Indian legal / taxation system. Thanks again.

O.Kay (none) 05 January 2013

anyone?

R RAJAGOPALAN (ADVOCATE) 07 January 2013

QUERY (1) What would be the most effective way of reporting this (i.e. one tht would ensure the authorities follow up on)?

REPLY-1 Give a complaint in writing, secretly, to the Director of Income tax (Investigation). Hand it over personally, or if sent by post, it must be by Regd Post, and must be superscribed 'SECRET'. If u expect any reward, the complaint shall contain your name & address with contact details.

QUERY-(2) Would me emailing the Directorate of Revenue Intelligence be of any use (see this link https://dri.nic.in/General/aspYouCanHelp.asp)? Do they even cover this sort of issue?

REPLY: Do not e-mail. as the confidentiality would be lost.. Giving complaint directly to the I.T.Dept is preferable to giving it to the DRI.

Query (3) Is it worth hiring a lawyer for this purpose? If I did hire a lawyer what sort of fees will I be looking at and also any well connected lawyer recommendations in Tamil Nadu?

REPLY: No need to hire any lawyer.

QUERY-(4) These transfers started since just before 2010, will Income Tax authorities look into tax returns from a few years back?

REPLY: Yes. The Income Tax authorities will look into tax returns from a few years back?

QUERY: (5) Also, Man + Woman have purchase real estate in India (in the Woman's name). They have had some sort of secret agreement with the seller whereby on official sale documents they have listed a different price to what they actually paid the seller. i.e. price on sale deed is 10% of actual sale price. My understanding is that they have done this to circumvent paying stamp duties (?) and other government taxes (?).

Is deal normal? Or is there a way for me to report this and how do I go about doing it?

REPLY: The deals are not normal. However mere suspicion, howsoever strong, will not do.There must be concrete evidence, such as the sale agreement, evidence of payment of the entire actual price etc.

O.Kay (none) 07 January 2013

Thank you Mr Rajgopalan. You have been very helpful.

Regarding Query 5,

I don't have the actual sale agreement...but I have copies of letters that state the actual sale price and how and to whom additional payments were to be made. All payments were made by cheques.

Most of the additional payments were made as "donations" to "charitable trusts". Some payments came from the Man's bank account and possibly from the Woman's Mothers account. I'm sure all dates will tally up to within a week of the sale transaction. Is it reasonable to assume the Income Tax officers will be able to look into the bank accounts of the individuals and the trust?