Gift to Beneficiary Trust

[Rajesh Jain]

A child's beneficiary Trust is a separate legal entity. Can the parents or the grandparents of the child be deemed to be relative in terms of Sec 56(2)(v) for making gift to the beneficiary Trust (whether to the corpus or otherwise). The definition of relative specifically mentions the donee to be either Individual or HUF. 

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Rajesh K Jain

Chartered Accountant

3rd Floor, 3A, Mangoe Lane

Kolkata 700 001

Mobile : 94330 05066 / 98300 96444

Office : 033 6458 3701

[RAJ SINGHANIA]

Dear Rajeshji,

The Answer to your query is in your query itself. A trust is outside the purview of section 56(2)(v) and therefore any amount of gift received by the trust is not taxable under this section. Now, even if the AO treats the trust as an individual (The single minor being the beneficiary), the gift received by the minor from his relatives again cannot be subject to tax u/s 56(2)(v).

 

Regards

Raj Singhania, FCA
+91-9830227678

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[Ankit Agrawal]

Dear Rajesh jain Ji,

Section 56(2)(v) is applicable to individual and HUF only. Also if trust is assessed as individual (the child being beneficiary), then also gift received is not taxed as it is exempted as received from relative. 

Thanking You

Regards,

CA Ankit Kumar Agrawal

M : +91 - 81000 11810

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Thanking You

Regards, 

CA Ankit Kumar Agrawal

Mobile - +91 - 81000 11810

[Gaurav Goenka]

SIR,

I HAVE FILED AN ONLINE RETURN OF CHILD BENEFICIARY TRUST , THE DEPARTMENT HAS CHARGED INCOME TAX AT 30%. THE RETURN WAS FILED IN ITR5. THE TAXABILITY OF TRUST SHOULD BE IN THE STATUS OF INDIVIDUAL ? IF YES, HOW SHOULD I FILE A CORRECTION WITH DEPARTMENT?. PLEASE HELP

GAURAV GOENKA  

[Jitendra Jain]

Dear Sir,

                I have faced the same problem like Mr. Gaurav Goenka. Please suggest.

Cheers,
CA. Jitendra K. Jain
+919830036250
Kolkata, India

[RAJ SINGHANIA]

Dear Gaurav,

A beneficiary trust is assessed as an AOP. Now in case of an AOP, if any of its member or beneficiary (in your case I presume there is only one beneficiary) is having income in excess of the maximum amount not chargeable to tax (i.e, 2,00,000/-) the applicable rate of tax is at MMR which is 30%. In case minor being the sole beneficiary, if any of his parent's income is in excess of Rs 2,00,000/- then the minor will be considered having income in excess of 2,00,000/- and hence the trust will be liable to tax at MMR. There is no scope of rectification as such in your case. It is a misconception that Taxability of trust should be in the status of Individual. 

 

Regards

Raj Singhania, FCA
+91-9830227678

[Vivek Jaiswal & Co. - Cal]

The return is to be filed as an AOP/BOI with fixed ratio among all members. Therefore where the name of the trustees is mentioned in the ITR, please give the sharing ratio of all trustees so that the total comes to 100%

 

This will ensure assessment of Trust as an AOP/BOI along with exemption limits as an individual.

 

Regards

Vivek Jaiswal

 

From: foru...@googlegroups.com [mailto:foru...@googlegroups.com] On Behalf Of Gaurav Goenka
Sent: 27 January 2014 12:05
To: foru...@googlegroups.com
Subject: Re: [CA RUNGTA PD] Gift to Beneficiary Trust

 

SIR,

 

I HAVE FILED AN ONLINE RETURN OF CHILD BENEFICIARY TRUST , THE DEPARTMENT HAS CHARGED INCOME TAX AT 30%. THE RETURN WAS FILED IN ITR5. THE TAXABILITY OF TRUST SHOULD BE IN THE STATUS OF INDIVIDUAL ? IF YES, HOW SHOULD I FILE A CORRECTION WITH DEPARTMENT?. PLEASE HELP

 

GAURAV GOENKA  

On 24 January 2014 13:12, RAJ SINGHANIA <rajsing...@yahoo.co.in> wrote:

Dear Rajeshji,

 

The Answer to your query is in your query itself. A trust is outside the purview of section 56(2)(v) and therefore any amount of gift received by the trust is not taxable under this section. Now, even if the AO treats the trust as an individual (The single minor being the beneficiary), the gift received by the minor from his relatives again cannot be subject to tax u/s 56(2)(v).

 

Regards

 

Raj Singhania, FCA
+91-9830227678

On Friday, 24 January 2014 11:14 AM, Rajesh Jain <121....@gmail.com> wrote:

A child's beneficiary Trust is a separate legal entity. Can the parents or the grandparents of the child be deemed to be relative in terms of Sec 56(2)(v) for making gift to the beneficiary Trust (whether to the corpus or otherwise). The definition of relative specifically mentions the donee to be either Individual or HUF. 

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[RAJ SINGHANIA]

In my view, as the Trustees are not beneficial owners, there cannot be any sharing ratio in between them and only the minor can be 100% beneficiary (As per the clause of the Trust Deed). In case you state that the parents are having a profit sharing of 50%, the said AOP will be having a member who has income in excess of maximum amount not chargeable to tax and therefore the AOP will be taxed at MMR or say 30%. Unless and untill the GTI of both the parents of the minor for whose benefit the Trust is created is below Rs 2 lacs, any such Trust will be assessed as an AOP at MMR.

 

Regards

Raj Singhania, FCA
+91-9830227678

On Wednesday, 29 January 2014 1:28 PM, Vivek Jaiswal & Co. - Cal <c...@vjcoca.com> wrote:

Till the time, the minor is a minor, there will be no sharing ratio with the minor, hence you can put the sharing ratio as 50% each (considering the two parents of the minors are trustees).

 

 

From: RAJ SINGHANIA [mailto:rajsing...@yahoo.co.in]
Sent: 29 January 2014 11:55
To: c...@vjcoca.com
Subject: Re: [CA RUNGTA PD] Gift to Beneficiary Trust

 

Dear Mr Jaiswal,

 

In case it is a single beneficiary Trust for a minor, what can be the sharing ratios of the Trustees and the minor?

 

 

Regards

 

Raj Singhania, FCA
+91-9830227678

[ANIL ANCHALIA]

PFA....

 

 

Regds,

 

CA ANIL ANCHALIA

M:8100310299, 9831126143

From: RAJ SINGHANIA <rajsing...@yahoo.co.in>
To: "foru...@googlegroups.com" <foru...@googlegroups.com>; "ggoen...@gmail.com" <ggoen...@gmail.com>
Sent: Tuesday, January 28, 2014 11:53 AM
Subject: Re: [CA RUNGTA PD] Gift to Beneficiary Trust

[Ecotech]

The income of parents is irrelevant. It will be taxed at Individual rates only. Minor cannot claim the Trust income as his income, unless he has right to receive and enjoy the same.

 

JNGupta

9331022920

Error! Filename not specified.

[sudeep nopany]

how to file such a return ONLINE for assessment year if the g.t.i. exceeds 5 lacs.

[Ecotech]

Minor is the beneficiary, but he becomes entitled to get the accumulations of income only on attaining majority. Hence, the income of the Beneficiary trust cannot be linked to parents’ income and as such, question of any beneficiary having taxable income does not arise. Such AOP will be assessed at Individual rates only.

 

JNGupta

9331022920

 

 

 

From: foru...@googlegroups.com [mailto:foru...@googlegroups.com] On Behalf Of RAJ SINGHANIA
Sent: Tuesday, January 28, 2014 11:54 AM
To: foru...@googlegroups.com; ggoen...@gmail.com
Subject: [SPAM]- Re: [CA RUNGTA PD] Gift to Beneficiary Trust

 

Dear Gaurav,

 

A beneficiary trust is assessed as an AOP. Now in case of an AOP, if any of its member or beneficiary (in your case I presume there is only one beneficiary) is having income in excess of the maximum amount not chargeable to tax (i.e, 2,00,000/-) the applicable rate of tax is at MMR which is 30%. In case minor being the sole beneficiary, if any of his parent's income is in excess of Rs 2,00,000/- then the minor will be considered having income in excess of 2,00,000/- and hence the trust will be liable to tax at MMR. There is no scope of rectification as such in your case. It is a misconception that Taxability of trust should be in the status of Individual. 

 

Regards

 

Raj Singhania, FCA
+91-9830227678

On Tuesday, 28 January 2014 11:08 AM, Gaurav Goenka <ggoen...@gmail.com> wrote:

SIR,

 

I HAVE FILED AN ONLINE RETURN OF CHILD BENEFICIARY TRUST , THE DEPARTMENT HAS CHARGED INCOME TAX AT 30%. THE RETURN WAS FILED IN ITR5. THE TAXABILITY OF TRUST SHOULD BE IN THE STATUS OF INDIVIDUAL ? IF YES, HOW SHOULD I FILE A CORRECTION WITH DEPARTMENT?. PLEASE HELP

 

GAURAV GOENKA  

On 24 January 2014 13:12, RAJ SINGHANIA <rajsing...@yahoo.co.in> wrote:

Dear Rajeshji,

 

The Answer to your query is in your query itself. A trust is outside the purview of section 56(2)(v) and therefore any amount of gift received by the trust is not taxable under this section. Now, even if the AO treats the trust as an individual (The single minor being the beneficiary), the gift received by the minor from his relatives again cannot be subject to tax u/s 56(2)(v).

 

Regards

 

Raj Singhania, FCA
+91-9830227678

On Friday, 24 January 2014 11:14 AM, Rajesh Jain <121....@gmail.com> wrote:

A child's beneficiary Trust is a separate legal entity. Can the parents or the grandparents of the child be deemed to be relative in terms of Sec 56(2)(v) for making gift to the beneficiary Trust (whether to the corpus or otherwise). The definition of relative specifically mentions the donee to be either Individual or HUF. 

Error! Filename not specified.

[Vikash Somani]

would like to know which form should be used for filling return of a beneficiary trust?


Sent from Samsung Mobile

[Ecotech]

ITR-5

 

JNGupta

9331022920

[Ecotech]

Trust is AOP, not Individual or HUF. No relatives.

 

JNGupta

9331022920

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