I perceive that I can’t have any tax legal responsibility if my good friend offers a single money present of three lakh rupees to my HUF as a result of after preliminary exemption of fifty thousand rupees out there for items obtained, the taxable quantity remaining could be solely two lakhs and fifty thousand rupees upto which earnings of an HUF is exempt. Is my understanding appropriate?
No, your understanding is just not appropriate. In case mixture worth of all items obtained through the yr doesn’t exceeds fifty thousand rupees, these items are totally tax free within the arms of the recipient however as soon as the combination of all items by a recipient crosses the edge of fifty thousand rupees entire of the quantity of the items obtained grow to be taxable with none exemption.
So there isn’t a preliminary exemption for items in case the edge is breached and the complete worth of three lakhs of the items can be handled as earnings of your HUF. After preliminary exemption of two.50 lakhs rupees, you’ll have to pay tax on steadiness fifty thousand rupees. Please notice that the earnings tax division can ask you to show the credentials of the individual like id, functionality of the giving the present to look at the genuineness of the transaction failing which the quantity of present can be taxed at flat charge of 60% along with surcharge and penalty and curiosity.
Moreover, there’s extra to the transaction perceived by you. As per the earnings tax provisions an individual can not settle for money greater than two lakhs in respect of any transaction failing which a penalty equal to the quantity obtained in money will be levied by the tax officer. So trying on the above information, it’s advisable to not take the present in money even when the present is real and you might be keen to pay tax on the quantity past the exemption quantity.
Balwant Jain is a tax and funding professional and will be reached on [email protected] and @jainbalwant on his Twitter deal with.
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