Will money funded from family members, from family members, friends to pay medical bills? | Mint

My father had to be hospitalized in July 2024 due to a brain stroke; He was in the ICU in the ICU for a month, and as soon as he became stable, we transferred him to a stroke Rehabilitation Center, where he was admitted for another four and a half months. Since the joint cost of the operation, hospital accommodation and rehabilitation center was large and the insurance was exhausted early, we had to start funding. We received the following funds: 1. My mother (non-earnings) received £ 5 from my uncle (her older brother). I received £ 5 Lakh from my grandmother from my mother and £ 1 from my aunt (wife of my mother’s younger brother). I understand that these amounts will be exempt from income tax in terms of section 56 (2). Is that right? Also read: Why historical data on withdrawal rate mislead the Indian retirees 2. I also received £ 3,55,519 from other people (my friends and mother’s friends, etc.). Would it fall under ‘income from other sources’? All the money was exhausted in the hospital and stroke rehabilitation center, and currently we are living from salary to the salary. -Avodit Sudhir. Any amount received without consideration from a family member would not be taxable and was specifically exempted in terms of section 56 (2) (x) of the Income Tax Act, 1961. With regard to your mother, the amounts of her brother would be regarded if those received from a family member and would therefore not be taxable. In your case, the amount of your grandmother of your mother, as well as the wife of your mother’s brother, would also be considered to receive family members and would therefore not be taxable. Also read: Why invest Rajeev Thakkar of PPFAS Mutual Fund in his own portfolio in terms of the amounts your friends and friends received from your mother can be considered taxable in your hands as it is not received from family members. Although one could believe that the amount received with a clear condition for expenses for a specific purpose should not be made in the hands of the recipient, a recent ITAT decision believes that such a crowd funded is taxable in the hands of the recipient under section 56 (2) (x). The ITAT decision was mainly based on the fact that there was a blend of the funds raised from crowdfunding with personal funds, and that the funds were not fully utilized for the purpose they were raised for. Consequently, if you have received the funds in a separate bank account, which is then used to incur the hospital and rehabilitation expenses, or if you can clearly confirm the link between the received funds and the amounts incurred, you can distinguish your case from the facts in this ITAT case. It may be possible to argue that the funds were received for spending for a specific purpose, spent for the purpose, and that you were merely a channel to pay the funds on behalf of the contributors. Alternatively, one may also consider demanding a deduction for the hospital expenses incurred from the received amounts, on the grounds that the incurrion of these expenses was the condition for receiving the Crowdfunding amounts. Also read: The split-up: how to protect your assets before and after marriage is very debatable. Therefore, you would need to maintain documents to support that the amounts were received with the obligation to spend on hospitalization and rehabilitation. Mahesh Nayak, Chartered Accountant, CNK & Associates. If you have any personal financing inquiry, then write to us at [email protected] to answer it by experts.