gifts

akash (Querist) 29 May 2010 This query is : Resolved
dear sir,
my mother wants to gift me money worth Rs 1 lac i cash and my sister wants to gift Rs 50000 in cash. please advice what is the procedure of receiving gift. whether any registration is required or simply a decleration and acceptation of gift on Stamp paper of Rs 10/- will do.
what could be the tax liabilty on the same.
please advice.

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A V Vishal (Expert) 29 May 2010
1.Gift from Mother and sister is not taxable.
2. There is no set procedure to gift out of natural love and affection, however, it is advisable to receive the gift by way of an account payee cheque.
3. There is no requirement of any NJ stamp paper or registration for gift of money.
4. Last but not least, take a simple letter from your mother and sister declaring the gift to you.

Jagmohan Rawat (Expert) 29 May 2010
I agree with vishal. As mother and sister fall under the definition of relative as per section 56 of the I.T.Act which is specified as an exception for taxing gifts received. Hence such gift will not be taxable. Further gifts of movables is not required to be evidenced on stamp paper.

Vineet (Expert) 29 May 2010
Though there will be no tax liability on gifts per se as they are being received from relatives, that does not preclude tax authorities to examine the genuineness of gift.

Being cash gifts it will be very difficult to establish the genuineness of transaction. So it is advisable that gifts be received through banking channels by way of cheques drawn on bank accounts of your mother and sister.

For documentation agree with Mr Vishal, a simple letter will do.