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Interest on fd

Sreekumar (Manager - Finance) (297 Points)

11 January 2017

Dear Experts,

I have some amount which I do not want ot make an Fixed deposit in a bank in my name as it attracts income tax as I am in 20% tax bracket.

I want to donate this amount to my son who is a major and does not have any income. Can he make an FD in his bank account and claim exemption submitting Form 15G?. Up to what amount I can donate the money to him?. An amount of Rs.20 lakhs earns interst of 1.3 lakhs for him which is not taxable. Can I do this.

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14 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 11 January 2017

Yes, you can donate any amount with proper documentation. 15G applicable only if his total income doesn't exceed basic limit.

1 Like

ankita gandhi (student) (5908 Points)
Replied 11 January 2017

Yes u can donate such amount as your son is major but do proper deed, so u have proof for it. And such income if below tax limit, u can submit form 15G.

2 Like

Sreekumar (Manager - Finance) (297 Points)
Replied 11 January 2017

Thanks Sir, One more question. Is this gift amount (which is more than rs.50000/-) is added to his income and taxable?

ankita gandhi (student) (5908 Points)
Replied 11 January 2017

As your son is included in relatives under income tax act, and gift to relatives is not taxable

2 Like

sagar (artice) (59 Points)
Replied 11 January 2017

yes first give that amount as gift to your son then your son put it as FD and submit form 15G as total income less than basic exemption limit.

Sreekumar (Manager - Finance) (297 Points)
Replied 11 January 2017

Dear sir,

Gift deed and registration is not required in this case, but I can give a cheque in my son's name to deposit in his account and convert to FD. Is this OK as for as documentation concerned.

Harendra Kumar (Tax Advisor ) (1326 Points)
Replied 11 January 2017

Further, if any amount which was donte by you another or other person and any Income carried out by such donete money to be liable or attract Tax Liabilty on such amount.

Sreekumar (Manager - Finance) (297 Points)
Replied 11 January 2017

Dear sir, Gift deed and registration is not required in this case, but I can give a cheque in my son's name to deposit in his account and convert to FD. Is this OK as for as documentation concerned.

Sreekumar (Manager - Finance) (297 Points)
Replied 11 January 2017

Dear sir, Gift deed and registration is not required in this case, but I can give a cheque in my son's name to deposit in his account and convert to FD. Is this OK as for as documentation concerned.

Sreekumar (Manager - Finance) (297 Points)
Replied 11 January 2017

Form 15G can be given?

sagar (artice) (59 Points)
Replied 12 January 2017

Gift deed is required as sometime AO may have option to argue that this is transaction in nature of loan or something else, so that time you may be in trouble. So right now for safer side you should make a gift deed .

vaibhav (student) (253 Points)
Replied 12 January 2017

Sir,

Continuing query, whether HUF of father can give gift to HUF of son? Is it exempted under eyes of law??

Sreekumar (Manager - Finance) (297 Points)
Replied 12 January 2017

Opinion given by a avocate. Legally gift deed is done when the item is movable in nature. For money given thro cheque/cash/neft need not have gift deed as per lawyer's opinion. As you said, AO may have option to argue that this is transaction in nature of loan or something else. Even if this is treated as loan I am not getting any interest from my son. And AO cannot argue something is 'something else', he should be specific in argument.