| What is the maximum amount that I can gift in a financial year to my relatives without paying any gift tax? What document is necessary for such gifts? Will the recipient have to pay tax on the amount received as gift? Is it necessary to inform the income tax department about the gift? |
H. Barua, Behala |
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| There is no cap or tax on the amount that can be gifted to or from one’s relatives. The Income Tax Act defines close or near relatives as lineal descendants and ascendants, that father, mother, uncle, daughter, son and so on. However, the gift received is considered as “income from other sources” in the hands of the donee. Hence, the donee will have to pay income tax on the amount, if he/she is a tax assessee. The donee will have to show the gift received in the income tax return. As for the documentation of the gift, maintain a gift deed witnessed by two persons. |
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| According to the Income Tax Act, in the case of escaped income of more than Rs 1 lakh, the time limit for issue of notice under Section 147 is six years from the end of the relevant assessment year. Please clarify whether this “six years” means the subsequent assessment years or financial years? |
M.L. Acharya, Calcutta |
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| assessing officer believes that the income of the assessee of any previous year has escaped assessment, the person can reopen the assessment and complete it as per new information about income or tax received. Assessment up to last six years can be reopened. The “last six years” thus refers to assessment years. To open an income escaping assessment, the assessment officer has to issue notice under Section 148 to the assessee. |
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| I am 76-years-old and I have a post office NSS 1987 account. I want to close the account by withdrawing the entire balance. I understand that TDS on the entire closing balance will be at the rate of 20.6 per cent. The entire amount withdrawn will have to be added to my total annual income. In which column of the Income Tax Return (ITR) form should I report this withdrawn amount? I use Form ITR 1. |
A.K. Bose, Golf Green |
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| You can show your interest income from the NSS account in item 2(b) of the ITR 1 form. |
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| If you have any queries about investing or taxes or a high-cost purchase you are planning, mail to: btgraph@abpmail.com, or write to: Business Telegraph, 6 Prafulla Sarkar Street, Calcutta 700 001. |
