Got a ₹10L Gift? Tax Dept May Question Your Books

If you receive a large cash gift and can't explain where it came from, the Income Tax department can add it to your income under Section 68 and tax it heavily. But if that cash is already recorded in your books, it cannot be taxed again.

Here's what happened: ITAT Indore ruled that cash already recorded as sales in a taxpayer's books cannot be treated as unexplained income and taxed again under Section 68.. A ₹10 lakh gift was under scrutiny; the tribunal sent the case back for fresh review, signalling that double taxation of the same cash entry is not permissible.. Section 68 lets tax officers add unexplained cash credits to your income — but courts require that the same amount must not already have a legitimate accounting entry..

What you should do: Document every cash gift above ₹50,000 with a signed gift deed, the donor's PAN, and proof of their financial capacity (bank statement or ITR copy).. Check that large cash receipts in your books — from sales, gifts, or loans — are recorded consistently across all entries so no amount appears twice or unexplained.. If you receive a Section 68 notice for cash already in your books, respond with account ledger proof and cite the principle against double taxation — consult a tax professional immediately..

Gifts from blood relatives are tax-free at any amount, but you still need a gift deed and donor's bank proof — the exemption is not automatic without documentation.

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