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Gift or loan

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Your new website is awsome. I have received payment from anNRE a/c monthly for Rs 40000/= for 8 months. Kindly suggest whether it could be shown as gift or loan. In either case it comes within my taxable limit. If treated as a loan whether agreement has to be made. The payments have been routed through banking channels. I am a retired banker with no pension but a pf optee and the FD interest is around 25000 as per 26as.

15 Answers
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Dear Sir,

Glad you like the new design of ReLakhs.com

May I know, if you received these payments from any of your close relatives?

Suggested readings:

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Topic starter

The Gift is not from a close relative. The Donor is paying through NRE/account and has complied with all their tax laws. Do I require a letter/document stating all the payments from the donor giving cheque no. amt etc

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If the Amount received is not from the close relative, it cant be considered as a Gift.

So, the amount received by you becomes a 'Taxable income' in your hands.

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Topic starter

I do understand that the Gift would be considered as taxable income. Not an isssue. Should I get a letter/document/affadvit with all details of cheque no etc since Gift deed is not mandatory in case of money paid.

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Gift deed is not mandatory in case the payment is through non-cash banking channel.

However, you can get an affidavit done and keep it as a future reference.

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Topic starter

My sincere thanks to you🙏🏽

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Topic starter

With your help I have filed ITR3 successfully under old scheme. I have shown the Gift amount and after deductions the net taxable income si Rs2.80 L. Now I have to file for my wife . She has received an amount of Rs 2,70000/=( all received before March 23) as gift for maintenance and subsistence of monthly expenses. She has a Pan No. I shall file for her separately since she has cpaital gains of Rs 700/=. My question

1) Can I show 70,000 (NRE) as gift and Rs 200000/=(NRO) as loan with the loan agreement to me made dt 27July 2023 since it has to be sent to USA. Or should I show it as gift for Rs 270000/=. Is is ok to get loan agreement now. Saying the truth is always better but the option is confusing.

2)Is clubbing provision applicable in my case. In which case I may haveto revise my return before july 31st. Please do suggest the best alternative.

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Dear Venkat ji,

1 - Do you mean to say that the money received from the NRO account needs to be repatriated again?

Is it a gift from close (blood) relation?

2 - See if the below article is of use to you plz;

Clubbing of Income of Spouse & Child : Definition, Scenarios, Examples & Exceptions

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Topic starter

I read the article. But still I had doubts. The money need not be repatriated. She is not a close relative and gift is taxable. But she has not earned much but for Rs 755 not from gifted money. Gifted money received is used for our monthly expenses till my son in germany gets an emplyment. So is it better to show it as gift. Thats easy. Is a loan on Rs 2 lacs possible with the agreement date later to the credit of my wife's account in Oct 22. I am sorry for troubling you.

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Topic starter

I read the image of clubbing of income of spouse and gifts. It was useful. I have not gifted any thing to my wife. She has just earned rs.700 through capital gains. There has been transfers between us for our domestic needs. I could not edit the previous post since it was timed out.

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Dear Venkat ji,

You are definitely not troubling me! I treat this an opportunity to enhance my knowledge and at the same time, provide help to as many readers as possible (on personal financial matters).

Since, it is not a Gift from close relative, let's be honest and consider it as Loan only.

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Topic starter

I sincerely thank you for your idea to show it as loan. Clubbing of income confused me and you have claried it. I verfied the savings bank of my wife's account and found that Rs 20000/= has been sent for using it for charitable purposes for her(USA relative) parents annual cermony for which I have receipts. Do the 50000 from NRE comes withing the taxable exemption limit. You have opened my eyes. I read your article on Promissory Note and Letter of agreement. I think it fit to raise a few doubts as a final clarification before filing my wife's return.

1. Can it be zero percent interest in case of loans from NRO

2. Payment received through neft on 25 10 22. So I propose to prepare an agreement back dated to 22 10 22 on a plain paper and get it notorised and subsequently also get a stamped LA further to this date and use whichever is required in case of need.

3. Since she is in USA I shall get everything ready and give the orignal to her and keep a xerox copy with me.

I hope I am right. Please correct me if wrong. I shall complete the filing on hearing from you.

Thank you very much🙏🏽🙏🏽

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I believe that hand-loans can be taken with NIL interest. That should be fine!

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Topic starter

Thank you very much. My sincere gratitude to your timely and prompt reply.🙏🏽

Sreekanth Reddy July 25, 2023 5:17 pm

@venkat You are welcome sir. Keep visiting ReLakhs and kindly spread the word about us among your friends' circles!

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