Taxation for Traders / Investors

[Snake.Head]

http://www.moneylife.in/article/tax...ales-clarified-will-help-taxpayers/45689.html

What above circular means for us as daytrader ?

 

[rangarajan]

Just one addition...it is possible that while the recipient of the gift doesn't have to pay any tax as the relative who gave the gift was covered under the definition of relative, the return gift may be still be taxable as often the reverse relationship is not covered under the definition

canikhil
Pl clarify :

Let us say, one married daughter gives a gift in cash to her mother legally say 10lac.

After some years say 1-3, mother sells her property & gives back a gift of say 30lac each to two of her daughters plus 10lac extra to the daughter who gave her a gift initially.

Is this return gift valid or not?
If Not valid how it will be treated by IT?
Whether the original gift should be called as loan?
The return Gift ( or call amount ) by mother, is it income in the hands of daughter because Gifts could not be returned as said by trade?

 

[traderniftybank]

Just one addition...it is possible that while the recipient of the gift doesn't have to pay any tax as the relative who gave the gift was covered under the definition of relative, the return gift may be still be taxable as often the reverse relationship is not covered under the definition

Yeah possible
For example a bahu can give gift any amount to her saas, but reverse gift is not covered.
There are some more examples covered within relative definitions, where reverse is not covered as relative. Just ridiculous.

 

[rangarajan]

Yeah possible
For example a bahu can give gift any amount to her saas, but reverse gift is not covered.
There are some more examples covered within relative definitions, where reverse is not covered as relative. Just ridiculous.

traderniftybank

can you pl give me the link for this relative list as per IT.

Where daughter & mother come in that.

bahu means daughter or daughter-in-law?

 

[traderniftybank]

traderniftybank

can you pl give me the link for this relative list as per IT.

Where daughter & mother come in that.

bahu means daughter or daughter-in-law?

Bahu means daughter in law
For list of relatives, I do not have any ready link. Just google for gift tax and you will get.
If your case is for mother and daughter, then no problem in any respect, either amount or return gift after some time say 1/2 years or after.

 

[traderniftybank]

canikhil
Pl clarify :

Let us say, one married daughter gives a gift in cash to her mother legally say 10lac.

After some years say 1-3, mother sells her property & gives back a gift of say 30lac each to two of her daughters plus 10lac extra to the daughter who gave her a gift initially.

Is this return gift valid or not?
If Not valid how it will be treated by IT?
Whether the original gift should be called as loan?
The return Gift ( or call amount ) by mother, is it income in the hands of daughter because Gifts could not be returned as said by trade?

Is this return gift valid or not?
-- valid, but better do not call or specify it as return gift. only call it as gift.
Mother can give any amount to her daughter and similarly daughter can give any amount to her mother

If Not valid how it will be treated by IT?
NA

Whether the original gift should be called as loan?
NA

The return Gift ( or call amount ) by mother, is it income in the hands of daughter because Gifts could not be returned as said by trade?
NA

 

[rangarajan]

Traderniftybank

Thanks for the prompt reply.

 

[canikhil]

Is this return gift valid or not?
-- valid, but better do not call or specify it as return gift. only call it as gift.
Mother can give any amount to her daughter and similarly daughter can give any amount to her mother

If Not valid how it will be treated by IT?
NA

Whether the original gift should be called as loan?
NA

The return Gift ( or call amount ) by mother, is it income in the hands of daughter because Gifts could not be returned as said by trade?
NA

For the list of relative, you may refer http://www.lawyersclubindia.com/for...-VII-of-Income-Tax-Act-19145.asp#.Vtf95UAUObM

rest, already covered in comments by Nifty trader..

 

[canikhil]

a couple of things that shall be relevant here:

1. while there may not be any tax, the gift donor still can be called to explain the source of cash

2. the mother, in your example, shall still be liable to pay any tax that may arise on sale of property.

 

[rangarajan]

a couple of things that shall be relevant here:

1. while there may not be any tax, the gift donor still can be called to explain the source of cash

2. the mother, in your example, shall still be liable to pay any tax that may arise on sale of property.

canikhil

understood & thank you
This is the case of one my neighbour, a old lady finding difficulty with her daily expenses & the donor , her daughter is working with source income.

Old lady, trying to sell her house & this is temporary arrangement to meet her ends.

By the way, are you a practising CA canikhil?