My father passed away during service in BSNL when I was already a major and my mother (below 60 now) received death/retirement benefits along with family pension.
If the money is invested in Fixed Deposits in my mother's name, she has to pay tax on interest above Rs 10,000/- as her taxable income crosses Rs 2 lakhs by pension alone. But I, being her only major son now and being a student have no taxable income as such but PAN card.
Therefore if the FDs are in my name, I have to pay no tax on the interest due to income < 2 lakhs. For this, my mother must gift me the money by way of a Gift Deed.
My questions are:
1) Is it mandatory for the gift money to be deposited in my single account or can a joint account where I am the first holder also do the job ? Please note that my mother will be the 2nd holder and so the FDs from that account will have her name too when i make e-STDR by online banking.
2) I understand gift deeds of movable property don't need registration. But how valid is a gift deed on plain paper with witnesses as compared to stamp paper with notarial seal ? Will they be accepted by the Income Tax Department ? Will it be valid if say 4-5 lakhs are gifted on Rs 10 stamp paper ?
3) Also, I am confused about opening a single account in my name or joint account with myself as first holder and my mother as second holder. Just because my mother is the second holder (Either or Survivor operation) of the account receiving the gift money, will the gift deed be put to question ?
I also do not wish to outright take away any legal rights of my mother to the money (if possible along with tax benefits) which brings in the question of Joint A/C. How valid is money gifted to joint A/C of Donee as primary holder and Doner as 2nd holder ? (Either or Survivor) I understand when the money is considered of the first holder and the second holder withdraws, it is automatically counted as a legal gift.
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