Money to parents

Tax queries 906 views 4 replies

Ashish

IT consultant

91 Points Joined July 2012

Hi,

My parents have rental income from our parental home but it is not sufficient so every month I give 4000 rupee to my parents to meet monthly expense.

My parents are senior citizens.

I have some liquid money, so is it OK if I FixedDeposit 500000 rupee on their name for next 2 years. This will generate 50000 interest per annum which is same as 4000 per month. Here point is that later I may take this principal amount for other investment, and intention to invest on their name is only to get return tax free. Because if I do FD on my name then I get less interest and also have to pay 30% tax on interest.

Please suggest.

Replies (4)

Saket Sinha

Student

129 Points Joined October 2011

If you take the principal then it is also not taxable in your hands as it will be treated as gift in ur hands.

ANUP GUPTA

KEEP SMILING fcaanupgupta@gmail.com

303 Points Joined February 2008

u can take fd on your parents name. No Issue

and as sarthak said it will be treated as gift which is not taxable

For this purpose, first issue the cheque on your parents name get it cleared in your parents a/c and then do fd on their name.

please do not forget to submit form 15H to save tds, otherwise bank will deduct Tds @ 10%

Ashish

IT consultant

91 Points Joined July 2012

Originally posted by : ANUP GUPTA
	u can take fd on your parents name. No Issue and as sarthak said it will be treated as gift which is not taxable For this purpose, first issue the cheque on your parents name get it cleared in your parents a/c and then do fd on their name. please do not forget to submit form 15H to save tds, otherwise bank will deduct Tds @ 10%

thanks to both for answering my query, but as written earlier I may like to take principal amount back after 2-3yrs, then how it can be gift?

I just simply want to invest some of my saving on thier name to get good return which they can utilize for monthly expense, so little worried that when I will take that principal amount back then IT dept can question me..

Saket Sinha

Student

129 Points Joined October 2011

See when u make a fd in name of your parents then it a gift from your side and after its maturity the amount then will be credited in your parents name and then your parents can gift this amount to u .