Hi
I need clarity on tax planning. Suppose I gift my parents Rs, 1 lakh each every year (who are obviously senior citizens with Nil Income) + my annual income is Rs. 4 lacs. Will I need to pay any tax on the same??
Is this a good tax planning tool?? I also have a younger brother aged 16 years. Please guide me.
Also please suggest some good tax planning tools as 31st march is approaching!
Regards
Hi,In your case as both your parents and your younger brother come under the definition of relative,Nothing will be taxable in their hands but you are asking about your tax planning.Giving gift to your relatives will not reduce your tax liability as it is not deducted while computing Taxable income.What Mihir sir is said is correct,Try to invest in 80c options,you will get 100000 deduction and furthur if you are new to shares and you can invest in Rajiv Gandhi Equity Savings scheme and get up to 50% of your contribution as deduction while computing taxable income subjected to Maximum of rs25000 u/s80CCG
Thank you Mihir and Nuli Swami Ayyappa for replying. Since gifiting would not reduce my tax liability then why do people insist on giving gifts to parents (including cash gifts) as a tax planning tool??
Please kindly elaborate.
Best Regards
CAclubindia
