V B Prabhu Verlekar
Q. I am a technocrat-educationist engaged in providing coaching and training to students preparing for engineering entrance exams. My former students, now well-established, have collectively gifted me an electric car worth Rs 20 lakh on my 70th birthday as a gesture of goodwill and appreciation for my guidance. What is the tax implications of receiving such a gift under Section 56(2)(x) or any other relevant section of the IT Act?
Sagar Sahastrabudhe, AI Trainer.
Under Section 56(2)(x) of the Income tax Act, 1961, any gift in cash or kind by way of immovable properties or specified movable assets in excess of Rs 50,000, to individuals other than specified relatives is liable for income tax at slab rate under the head “income from other sources.” The specified movable assets cover shares & securities, jewellery, archaeological collections, paintings, drawing, work of art and bullion. It does not include electric cars. In view of this electric car gifted to you will be fully exempted from tax even though value of the car exceeds Rs 50,000.
Q. While filing my tax return for 2020-21, viz. assessment year 2021-22, I missed declaring income of Rs 40 lakh towards compensation received due to oversight. Now in this month I have received notice u/s 148 from income tax department stating that my income has escaped assessment for AY 2-21-22. I am advised to avoid headache, I should voluntarily pay tax on the Rs 40 lakh compensation along with interest for delay with application to drop penalties. Please guide.
Ganesh Shet Gaonkar, Harmal.
Section 148 of the Income Tax Act 1961 empowers the assessing officer (AO) to reopen past years completed assessments, if AO has credible and reliable information suggesting that income chargeable to tax has escaped assessments. This notice can be issued after following certain mandatory procedures. The notice u/s 148 is mandatorily required to be issued wit hin a period of 3 years and 3 months from end of the AY for which notice is issued, if income escaped is less than Rs 50 lakhs and within 5 years and 3 months if escaped income exceeds Rs 50 lakhs. In your case the time limit for issue of notice (3 years and 3 months) for AY 2021-22 ends on June 30th 2025. You have received notice in October 2025 which is outside the limitation period and hence time barred and invalid. In view of this, you should reply to the notice giving legal reasons stating that your income is less than 50 lakhs; the time limit has expired. In view of this legal provision, you need not pay any tax on this evaded income. Thank God for this.
Q. Our WhatsApp Raja-Rani group wish to know the quantity of gold a family is allowed to own, to remove anxiety from our mind. Please inform.
RajShekhar, group administrator.
The Income Tax Department does not impose a fixed legal limit on how much gold a person or family can own or hold in India. You can hold any quantity of gold jewellery or bullion if it has been acquired from explained sources of income, inheritance, or gifts. However, during income-tax searches (raids), the CBDT has issued guidelines on gold jewellery that will not be seized, even if you cannot show purchase proof by CBDT-prescribed limits (Instruction No. 1916, dated 11.05.1994) as follows: Married woman: 500 grams; Unmarried women 250 grams; Male member 100 grams. Please note that these limits apply only during an income tax raid- not as a legal ownership ceiling. If your gold is declared, inherited, or purchased from known income, you can legally own any quantity.
Q. I am currently working in Saudi Arabia at Aramco at a senior position. I will retire on December 31, and will be returning to Goa in February 2026. I will get substantial retirement benefits on the day of retirement plus monthly lifetime pension of $5000. Please guide me as to what I must do before I land in India. My stay in India for past 10 years never exceeded 60 days. What is the way in which I can make my pension tax
free in India? Joseph S. Pimenta, Benaulim.
Taxation of pension received from foreign country depends upon your residential status and source of income under Indian tax law. The right planning before returning can make your pension tax-free for some years. Under section 6 of the IT Act, your residential status for a financial year depends on the number of days you stay in India. Your stay in India has never exceeded 60 days in the past 10 years. Hence, you are a non- resident (NR) till March 2026. As a NR, any foreign income received by you outside India will be fully exempt
from tax. You should therefore receive the retirement benefits and pension in a foreign bank account. If you settle permanently in India after March 2026, you’ll become, resident but not ordinarily resident (RNOR) for the next two years, because you have been an NRI for 9 out of the past 10 years, or You have been in India ≤729 days in the last 7 years. When you are RNOR, any income which is earned and received abroad is fully exempt, therefore you should credit your monthly pension directly in a foreign bank account for 2 years and then remit the same to India. If you receive the pension directly in India, it will be charged to tax.
From FY 2028-29 onwards, you’ll automatically become, resident & ordinarily resident “(ROR). At that point, your global income, including pension from Saudi, would entirely
taxable in India.
The writer is well established, senior practising chartered accountant with wide experience in taxation and finance. He is also a strategist in turn round management of institutions.
