Can the gift be given any number of times in a financial year or should it be given only once? If I am gifting to my parents, do I need to document the gift? Can I claim any deduction for such gifts given to my parents? My parents do not have PAN as they do not have any income.
Answer: There is no restriction on the number of times a gift can be made to the same person or different persons during a year. Each such transaction shall be treated as a separate gift.
You must route the gift transaction through banking channels for proper proof and transaction trail. However, if you are gifting in cash, each transaction of cash gift should be less than two lakhs otherwise the recipient may face penal action for accepting gifts in cash of two lakhs or more.
For the transaction of gift to be complete, it must be accepted by the donee during the life time of the donor as per the Indian Contract Act, therefore it is advisable to produce some document as evidence of the transaction which Signed by you as well as your parents. No tax benefit is available to you in respect of such gifts.
Although gifts received from certain specified relatives such as parents and children are not treated as income of the recipient, the tax department may inquire your source for giving such gifts, failing which a tax of 60% will be levied on the same. Can be taxed at a flat rate. Your parents. There is no problem even if your parents do not have a PAN to receive the gift.
Balwant Jain is a tax and investment expert and can be reached on his Twitter handles at jainbalwant@gmail.com and @jainbalwant.
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