Tax on home loan closure

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8 Points Posted on 21 September 2020
Son takes a home loan a year back and it is repaid completely by the Parent. Will the son be taxed on the funds paid by parent on loan closure or the parent be taxed. appreciate if you may clarify with the mentioned case with any other tax be attracted on the transaction.
thanks.
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On 21 September 2020 at 18:27 Report
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This discussion clarifies the tax implications when parents repay their son's home loan. Funds used to close the loan are generally treated as a gift from parents to the son and are exempt from income tax under Section 56(2). Consequently, the property itself is also considered a gift, with no tax payable on the asset received by the son.

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Chartered Accountant
4524 Points Posted on 21 September 2020
Whole amount is exempt from income tax as it will be treated as Gift from parents and exemp u/s 56(2).
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On 21 September 2020 at 18:47
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8 Points Posted on 21 September 2020
Thanks Sunil for your swift response.... one leading question... which also means the property against which the home loan is taken will also be considered as a Gift and no tax is paid on the asset the Son got.
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On 21 September 2020 at 18:50
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Chartered Accountant
4524 Points Posted on 21 September 2020
Yes you are correct
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On 21 September 2020 at 18:55

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