Trf of income from son to dependent father

Tax planning 535 views 13 replies

Hi,

In this case son transfer certain sum of money to his dependant father on monthly basis & in order to avoid tax on interest his father does FD from the same amount on his behalf as his father does not come under tax bracket. is this acceptable? 

Is there any chances of query on such transaction?? 

Replies (13)

You have to treat the amount transfered by son to his father as gift. Then father can invest the same in fdr in his own name to avoid the tax in the hands of his son. INcome of interest on FDR will be the taxable in the hands of his father.

Any documentation to be done for the same like gift deed or some thing? or its fine if we not do anything. 

When transferred though Banking chennels, no other documents needed 

Thank you 

No. You need to execute the deed of gift.

that deed of gift should be on plain or stamped Paper

question 1.  sir if husband gift rs. 500000 to his wife and wife invest this amount in fdr 

so question is arise , 

tax on interest income from fdr will taxable in hand of husband or wife

question 2.  sir if father gift rs. 500000 to his son ,and son invest this amount in fdr 

so question is arise , 

tax on interest income from fdr will taxable in hand of father or son

@ Monica: 

Because of clubbing provision in both cases 

1. Husband  & 2. Father

sir i want clear second q son is  a major child not minor

No, for major son no clubbing provision applies.

ok sir please clear me about all relation , that are covered or not covered under clubing provision on income arise from gifted property or money

Section 60 to 64 of IT section has clearly specified all the applicable provisions of clubbing of income.

But in short, individual relationship: Minor child, spouse, daughter-in-law (tips to remember)

ok sir thanks for your answer


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