Creating Corpus for my Daughters who are 18+ by Gift with Affidavit & Invest in Mutual Funds

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Vijaykumar Chandrasekaran

47 Points Joined December 2018

Dear Madam/Sir,

I am Vijaykumar from Chennai & looking to create corpus for my Daughters who are now pursuing their college 18+ & do hold their own Pan Cards respectively. I am looking to gift money to their respective bank accounts with an affidavit (Is a simple letter in my named letter pad with my Pan & their Pan number is enough for income tax records). I am an assessee & the gift amount that am planning is Rs 1 or 2 Lakh (every Financial Year) which would be far minimal than the taxable income within their limits. Investing the gifted amount to a long term Mutual Funds. I assume there is no tax part that will be incured on my Daughter's account at this point [I do understand that there will be Capital Gains/Loss on disposal of the Mutual Funds that might happen in the future].

Kindly let me know

is there any tax implications that might be happening in my Daughter's Pan [given we are not filing returns as they do not come under taxable income factors at present]
Is simple affidavit with our pan's mentioning with the gift amount & transaction details is enough for Gift Affidavit

is there any other parameter applicable, kindly suggest.

Regards,

Vijay

Replies (2)

Rama chary Rachakonda

Master in Accounts & high court Advocate

9434 Points Joined December 2011

No tax implications on the gifted amount in your daughters' hands since the gift is from a parent (you). As per Indian tax laws, gifts from relatives like parents are exempt from tax in the receipient's hands. Since your daughters are not filing returns and their income is below taxable limits, there is no issue there.

A simple affidavit mentioning the gift amount, transaction details, and PANs of both you and your daughters should be enough for gift documentation This helps establish the source of funds for income tax records.

Gift amount is within limits. so no tax

Investing in Mutual Funds: Gains from mutual funds in your daughters' accounts will be taxed as per their tax slab when they dispose of the funds. Since there are likely below taxable limits now, tax impact might be minimul.

Keep the affidavit with transaction details for future reference, especially for capital gains tax when the mutual funds are redeemed.