Gift to daughter as education fees

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

21 July 2017 Good Day Sir,

I had sold my flat & part of the proceeds after paying Capital Gain tax I have gifted to my daughter( Student) in her savings account as Fixed Deposit to pay her Education Fees abroad.
Interest earned from Fixed Deposit is being shown as her income in interest earned.
1.Please advise if it is permitted ?
2. Tax liability on interest earned from Fixed Deposit is on my daughter OR me as Father who will be using these funds for payment of Education Fees.
3. Is there any other way for me to reduce tax liability & also utilise money for her education fees?

K Srinivas, CMA CS

K Srinivas, CMA CS (Expert)
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21 July 2017 1. Permitted. But, if the amount of gift is more, document the gift by executing a gift deed
2. It will be taxable in her hands if the gift is bonafide. Else, it will be clubbed with your income.
3. Instead of fixed deposit, try investing in large cap or diversified equity funds with SWP option after one year. THe gains you make on redemption will be tax free if you redeem after one year and the returns will be more than from the FDs.

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Querist : Anonymous

Querist : Anonymous (Querist)

31 July 2018 I am sorry for late acknowledgement. I have made Gift Deed on stamp paper but not registered. However, instead of SWP, I have made FD in her account & filed IT return declaring Interest her as income in her IT Returns.