How to ensure cash gifts from parents don’t land you in tax trouble

financialexpress.com:

A cash gift from parents is exempt from tax but taxpayers are required to report it in their Income Tax Return as exempt income. However, many taxpayers are unsure as to how and where they can report such gifts in ITR. Further, there seems to be some confusion about the formalities one should complete to remain clear in the eyes of the Income Tax Department.

For instance, Amlan Rakshit, a taxpayer, recently wrote to FE Money, saying he is aware that any gift received from parents is tax-free but he asked how to report such gift as Exempt Income in ITR. Further, Amlan wanted to know the formalities he should complete to remain “clean” in the eyes of the law.

While it is important to declare any cash gift received from parents in ITR, the recipients of such gift should also execute a Gift Deed on Stamp Paper, if it involves a large amount. This Gift Deed will serve as proof in case there is any query from the tax department in the future, according to experts.

The following are some important points taxpayers should keep in mind to ensure the cash gift from parents doesn’t land them in tax trouble in the future:

“Gifts received from parents are exempt from tax.  However, it has to be declared in the Income tax return (ITR) as exempt income under Schedule Exempt Income (EI) in the ITR form,” says Sudhakar Sethuraman, Partner, Deloitte Touche Tohmatsu India LLP.

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“Receipts of any amount from the specified relatives (which includes Father and Mother) as a gift would not be chargeable to tax as per the provisions of Section 56(2)(x) of the ITA. While the current ITR schedules do not have any specific disclosure to report the