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Clubbing of income

Tarun (engineer) (39 Points)

15 June 2014

SIr
I hav one doubt..My gross salary is around 8lpa. I hv now accumulated around 3laks in my saving account.
Can i gift that money to my Mother who is non earning member ,

Suppose i transfer the amount to her account ,If i do a FD.Do i have to pay tax for the interest earn on that FD.She comes under lower slab of the income tax.
How can i transfer money to her account to reduce my tax laibilty

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8 Replies

Mihir (Wealth Manager) (5293 Points)
Replied 15 June 2014

You may prepare a document supporting this transaction of gifting 3 lacs to your mother. If she creates an FD of this amount in her name, the interest she earns will be taxable in her hand.

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 15 June 2014

as far as my understanding goes, income of spouse or son's wife or minor child is clubbed in certain cases. i dont remember any provision regarding clubbing of income of mother. therefore i suggest you to gift the money to your mother and invest in FD on her name. any income from such FD should not be clubbed on your hands.

Tarun (engineer) (39 Points)
Replied 16 June 2014

Sir
One more doubt

Suppose in future say after 1 year i took 3lakhs from my mother.All transactions online banking.
What wouldd be tax liability in tht case and to whom.

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 16 June 2014

no tax liability on such transfer as it would amount to gift by a mother to her son. and a gift to relative of any amount is exempt under gift tax act. relative means the person included in its meaning within the act. i cannot remember the exact section, so sorry for not mentioning the same.

KIYOSH (TAX CONSULTANT) (332 Points)
Replied 16 June 2014

Yes

Agreed wtih Mr Tribhovan

No tax liability to you & your mother for gifting.

Tarun (engineer) (39 Points)
Replied 16 June 2014

Thanks for your reply Seniors..

Can anybody please quote the section for the same.

Also one more doubt I give the money as gift/loan. What would be the difference in terms of tax implication if i do FD in her name.

Also to reduce the TDS dedcution.Is it necesssary to submit the 15G every time.
or can i file the incometax return to get the refund.

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 16 June 2014

transfer the amt. by way of gift.... no tax on income from FD of your mother does not have any other income.... yes you need to submit 15G/H yearly to bank in order to avoid TDS. ...... its better to submit 15G/H and avoid tds