RE:Gift to relatives....Is that to help me anywhere
by Amitabh on Apr 30, 2007 09:46 AM Permalink
No,you do not get any deduction by giving any gift to a relative.If your income is otherwise taxable,you have to pay your tax first and then out of net receipts only can you give a gift.Your relative may not be taxed on the amount you are giving the gift but there will not be any difference in your tax liability.In fact if you give a gift to your spouse or minor child,the income therefrom,if any,will be clubbed in your hands and will be taxed as your income.
RE:Gift to relatives....Is that to help me anywhere
by Ahmed Ali on Apr 30, 2007 10:34 PM Permalink
The recepient has to pay tax on the gift received(with certain exceptions).It may be alright if both doner and receipient are in India, that way only one person pays the tax(as this is not deductible for the donor). What if the donor is in a foreign country(U.S.), this is not deductible for the donor, so thaey have to pay tax. Is it still taxable for the receipient in India? as one party has already paid tax on this amount. Otherwise it amounts to double taxation, it is not fair.
RE:Gift to relatives....Is that to help me anywhere
by Amitabh on May 01, 2007 09:46 AM Permalink
No,Ahmed.It is not like that.You see,if I earn some income and pay tax on it and thereafter I give a gift to you.Then it becomes your income,isnt't it ? You are not my relative.My earning an income and taxability of that income and my giving of gift to a relative or non relative and the taxability of that amount in the hands of recepient are two entirely different issues.The question of double taxation would arise if the same income is taxed twice in the same hands.If I receive something,I will have to pay tax on it,if the law so requires.If I give a gift out of that income,the gift will become the recepient's income and whether it will be taxed in his hands or not again depends on the law.Whether I am a relative of the recepient and whether the amount received by the recepient overall excedds Rs 50,000 or not.And yes,one thing has to be very clear-there is no reduction in the tax liability of the donor by giving any gift,never.It is immaterial whether the amount is exempt in the hands of recepient or not.
