Transfer of money from mother to son-Tax implications

5527 views 3 replies

Ninad

Service

52 Points Posted on 01 February 2011

A mother a senior citizen sold property in her name and now wants to give the amount of sale proceeds after paying taxes if any to her 2 sons equally so that they can invest this amount in their name . What tax implications do the following have

1. Transfer the amounts by cheque to the individual sons account and the sons use it to buy property. Would this be considered as gift and is there any documentation to follow as the income tax act does not specify any such documentation

2. Directly issue cheque from her own account to acquire property (flat) in sons name

Thanks in advance

Ninad

Replies (3)

Member

Management

325 Points Posted on 01 February 2011

Since the taxes have already been paid, then she can legally gift the property with proper documentation. Whether the income from such gifted money can escape the rigours of Section 64 is doubtful.

CA PARAS BAFNA

Practising CA

33428 Points Posted on 02 February 2011

In case, both the sons are major, mother can gift the amount to sons in this situation.

The money becomes property of respective son. Which the may utilise according to their own wishes.

If mother purchases house and gifts to major sons clubbing provisions are not attracted.

Further........

If mother purchases a house in her name and lets it out. If she transfer the income to sons , income will be clubbed in the hands of mother.

ashoka r d

senior audit assistant

82 Points Posted on 02 February 2011

1) ang gift made by a mother to her sons is exempted provided the sons should not be minors otherwise clubbing provision will atrract, that means that will be taxable in the hands of sons and ultimately in the hand of the mother