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Invesment through parents for saving of tax

akbar (self employed) (194 Points)

20 February 2023

Make a gift to parents

You can transfer your surplus to your parents under a gift deed and make investments in their name.

Basic tax exemption limit for senior citizens is ₹3 lakh, while super senior citizens aged 80 years and above get tax-free income of up to ₹5 lakh.

Please let me know the reference of section of income tax act and applicability

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9 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14234 Points)
Replied 20 February 2023

Section 56(2) of the income tax Act 1961. please refer section in detail .

CA Surya Sekar (CFO ) (1347 Points)
Replied 20 February 2023

Diversion of income can't escape tax liability if the main motive is to avoid the tax

Eswar Reddy S (CFO- at NHTF) (58219 Points)
Replied 20 February 2023

If income tax question the source of income then it will be caught easily.

1 Like

Income Tax Wala: (Fin. Expert) (Chartered Accountants) (2015 Points)
Replied 21 February 2023

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Transfer of Funds to Relatives

Eswar Reddy S (CFO- at NHTF) (58219 Points)
Replied 22 February 2023

Instead of that , you can pay salary to them and it is legally permissible

1 Like

akbar (self employed) (194 Points)
Replied 22 February 2023

In which section salary paid to parents is legally permissible and it is allowed for income tax exemption.

Eswar Reddy S (CFO- at NHTF) (58219 Points)
Replied 22 February 2023

Principles of natural justice allows.

The effort they do , parents are eligible for compensation from son/ daughter for their expenses.

Even the workers in the house are paid monthly salary.

For senior citizens, upto 5lacs income , no tax

1 Like

akbar (self employed) (194 Points)
Replied 22 February 2023

In which section son can claim tax exemption in his personal ITR on the amout paid to his parentas as a salary.

And if the son is salaries employee then it is possibe to give the payment supporting to his employer and claim tax exemption so that his empoyer would allow and cant deduct TDS from his salary.