My son, a marine engineer serving in a foreign ship, issues cheques to me from his NRE account in India for large amounts as gift. Am I liable to pay any income/gift tax for the amounts that I receive ?

— Gopinathan

According to the Income Tax provisions, any sum of money received from a relative as gift is exempt from tax. The term relative has been defined in the Income Tax Act, 1961 and the same includes son. Hence, the sum gifted to you by your son shall be exempt from tax in your hands. However, the income earned from investment of such gifted sum shall be taxable in your hands.

Please note that you may be asked by the tax officer to explain the receipt of gift for which you will, then, have to explain/give complete details.

I am going to purchase a flat for Rs 57 lakh in December. Do I need to deduct tax at source from the payment? I don’t have a TAN number. If yes, then what is the process and by when should the tax be deposited with the government?

— Sumana

The Finance Act 2013 has introduced a new section whereby a buyer of an immovable property (other than rural agricultural land) worth Rs 50 lakh or more is required to deduct and deposit withholding tax at the rate of 1 per cent from the total consideration payable to a resident transferor. The purchaser of the property is not required to procure Tax Deduction Account Number (TAN), instead he is required to fill an online Form 26QB and thereafter register with TRACES to generate Form 16B online and issue it to the seller. Please note that the tax needs to be deposited within seven days from end of the month in which the tax was deducted /payment is made.

(The author is a practising chartered accountant)

Related Topics
comment COMMENT NOW