ITAT Reliefs Taxpayer in Cash Gift Case & Small Savings Rates
By ThePip Desk
Chennai ITAT deletes ₹85.30 lakh addition on cash gifts, validating Section 68 documentation. Meanwhile, Small Savings Scheme rates hold steady for Q3.
The Chennai bench of the Income Tax Appellate Tribunal has granted relief to a taxpayer by deleting an ₹85.30 lakh addition made by the Income Tax department over cash deposits declared as gifts. Government authorities simultaneously announced that interest rates for Small Savings Schemes will remain unchanged for the third quarter of the 2026-27 financial year.
Dissecting the ITAT Cash Gift Ruling
Tax authorities initially challenged the legitimacy of the deposits by classifying the funds as unexplained income and issuing a notice for tax recovery. The taxpayer successfully discharged the burden under Section 68 by presenting gift deeds and documentation to substantiate the transactions.
Key Case Details
The Income Tax Appellate Tribunal examined the evidence and established distinct factors regarding the proceedings:
The taxpayer provided gift deeds and relevant documentation for ₹85.30 lakh in cash deposits.
The tribunal ruled that donors having low income alone is not enough to reject genuine gifts.
The tribunal concluded that the taxpayer successfully established the identity, creditworthiness, and genuineness of the donors.
The ITAT set aside the tax department order, accepting the gifts as valid and exempting the taxpayer from additional tax liability.
Small Savings Schemes Interest Rates
The Government of India maintained interest rates for various Small Savings Schemes at existing levels for the period covering October 1, 2026, through December 30, 2026. This directive marks the tenth consecutive quarter that these rates have remained unchanged.
Scheme Interest Rate Overview
The Finance Ministry notification details the specific interest rates effective for the third quarter:
Sukanya Samriddhi Scheme holds an interest rate of 8.2 percent.
National Savings Certificate offers a rate of 7.7 percent.
Kisan Vikas Patra provides a rate of 7.5 percent with a maturity period of 115 months.
Monthly Income Scheme is set at 7.4 percent.
Public Provident Fund and three-year term deposits both maintain a rate of 7.1 percent.
Post Office Savings Deposit holds an interest rate of 4 percent.
These concurrent financial developments highlight ongoing regulatory scrutiny over cash transactions alongside a persistent holding pattern for government-backed savings yields.