Do not contravene section 269 ST even for gifts
received from relatives
CA V.K. Subramani
It is well known that receipt of gift from relatives is not
liable to income-tax. However, the same gift from others would be liable to tax
unless it is covered by exceptions listed in proviso to section
56(2)(x). Also, such gifts from non-relatives are liable to tax only when the
aggregate amount exceeds Rs. 50,000.
Taxpayers in general take cash gifts from family members to
meet urgent expenses which may include business exigencies. Gift to spouse and
son's wife operate by way of clubbing of income earned out of such gifted money
or asset. The clubbing provision would hold the field as section 56(2)(x)
would not apply in such case.
One may be tempted to know whether section 269 ST would
apply to such exempted gifts contained in the proviso to section 56(2)(x).
Section 269ST says that a person shall not receive
otherwise than by an account payee crossed cheque or an account payee bank
draft or use of electronic clearing system through a bank account or through
such other electronic mode as may be prescribed a sum of Rs.2 lakhs or more
(i) in aggregate from a person in a day; or (ii) in respect of a single
transaction; or (iii) in respect of transactions relating to one event or
occasion from a person.
Contravention of section 269 ST is liable for penalty under
section 271 DA. The quantum of penalty is equal to the amount so received (in
contravention of section 269ST).
There is no express provision contained in section 269 ST
to provide immunity in respect of the amounts received by cash even from
relatives, which is not 'income' because of section 56(2). Therefore, one must
keep in mind that the receipt of cash gift of Rs.2 lakhs or more would
expose the recipient to penal consequence under section 271DA.