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Invesment through parents for saving of tax

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akbar

self employed

154 Points Posted on 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

Replies (9)

Quick Summary

This discussion explores the possibility of reducing personal tax liability by gifting funds to parents and having them make investments. It highlights the higher tax exemption limits for senior citizens (₹3 lakh) and super senior citizens (₹5 lakh). While Section 56(2) of the Income Tax Act is mentioned regarding gifts, the consensus is that directly claiming exemption on salary paid to parents in your own ITR is not permissible. However, parents can invest the gifted funds in their own names, benefiting from their higher tax-free income thresholds.

prasad Nilugal

GST Practitioner & Accounts

9000 Points Posted on 20 February 2023

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

CA Surya Sekar

CFO

486 Points Posted on 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

15022 Points Posted on 20 February 2023

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

Income Tax Wala: (Fin. Expert)

Chartered Accountants

1412 Points Posted on 21 February 2023

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Transfer of Funds to Relatives

Eswar Reddy S

CFO- at NHTF

15022 Points Posted on 22 February 2023

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

akbar

self employed

154 Points Posted on 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

15022 Points Posted on 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

akbar

self employed

154 Points Posted on 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.