Gift tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 January 2013 can any body tell me that in what cases the income generated from the Gift given by donor to receiver is taxable on the hands of receiver. Say if A gives Rs.55000/- to B and if B makes Fixed Deposit of Rs.55000/- and earns interest Rs.5000/- out of it then in what cases the tax on Rs.5000/-is payable by Receiver and in what cases by the donor .

Note : A and B both are relative to eachother under the definition of IT.

Further, if say C is having income of Rs.500000 per annum. IF he gives Rs.200000/- as a gift to his parents then if Parents makes bank FD and earns interest Rs.20000/- then tax on Rs.20000/- will be payable by the C or his parents.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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13 January 2013 A gifts Rs 55000/ to B.
.
Conditions in which income of Rs 5000 generated from the amount gifted will not be included in the hands of A-
.
1. A is not a relative of B.
2.1 A is a relative of B but they are not spouse of each other or
2.2 A is a relative of B but B is not a minor child of A or
2.3 A is a relative of B and B is not son's
wife of A.
.
Persons like C are rarely found nowadays who makes gift to their parents. Income is taxed in the hands of parents and not in the hands of "Good Boys" like C.
.

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Querist : Anonymous

Querist : Anonymous (Querist)

13 January 2013 Sir, My income is about Rs.4.5 Lacs perannum. TDS are being made from my salary. Now if I want that from this saved amount no further tax should be implicated then should I gift all my savings to both parents individually who in turn will make separate FDs in their name and interest earned by them will be non-taxable(since they have no other income) Will it do. Kindly guide Sir..

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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13 January 2013 With a careful thinking about other successors or heirs of your parents, you may do so. Option to invest in immovable property like plot of land in own name may also be considered.
.

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