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What will be the consequence in the following case ??

Tax queries 385 views 15 replies
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CA Assistant
59 Points Posted on 08 January 2019

If I deposit 7,50,000 in my mother's account (dependant) and makes a FD @ 6.5% of them. After maturity of FD I retransfer the principle amount to my account.

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On 08 January 2019 at 12:57 Report
Replies (15)
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Team Lead
7558 Points Posted on 08 January 2019
it will be taxable in your assssement
1 Reply
On 08 January 2019 at 13:18
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150 Points Posted on 08 January 2019
Section 61 of IT Act would apply and as deemed income holder, you would be taxed.
1 Reply
On 08 January 2019 at 13:33
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CA Assistant
59 Points Posted on 08 January 2019
If there is no retransfer and 7,50,000 remains intact with my mother.
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On 08 January 2019 at 13:42
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CA Assistant
59 Points Posted on 08 January 2019
If there is no retransfer and 7,50,000 remains intact with my mother.
1 Reply
On 08 January 2019 at 13:42
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Team Lead
7558 Points Posted on 08 January 2019
then till maturity, fd interest will be taxable in your hands
1 Reply
On 08 January 2019 at 13:45
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150 Points Posted on 08 January 2019
Abhishek in that case, it would be treated as Gift to mother under section 56(2) of IT Act and income would be taxed under mothers hand.
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On 08 January 2019 at 13:48
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Team Lead
7558 Points Posted on 08 January 2019
but gifts are exempt from tax for close relatives. mother and son being relatives so i believe it wont be taxable. only interest component wud get assessed in sons hands
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On 08 January 2019 at 13:52
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CA Assistant
59 Points Posted on 08 January 2019
Sir it means there will be no tax u/s 56(2) on gift amount i.e. 7,50,000 as tax has already been paid and for irrevocable transfer section 62 gets invoked where income earned from investment on 7,50,000 will be taxable in the hands of transferee i.e. my mother. Kindly confirm my interpretation.
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On 08 January 2019 at 13:55
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150 Points Posted on 08 January 2019
Yes you are right Giridhar, only income earned from Rs.7.5 lacs would be taxed, but in mothers hand.
1 Reply
On 08 January 2019 at 13:55
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Team Lead
7558 Points Posted on 08 January 2019
but mother has not invested in fd. son has transferred to mothers account without consideration and invested in fd. so interest will get taxed in sons hand.
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On 08 January 2019 at 13:57
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150 Points Posted on 08 January 2019
Yes, abhishek. Section 62 is not applicable in your case as mother is going to have the money as Gift from son and Sec 56(2) invokes and income from same is taxed under 56(1).
1 Reply
On 08 January 2019 at 13:58
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CA Assistant
59 Points Posted on 08 January 2019
ohhk.. because I'm not transferring an asset thats why sec 62 wont be applicable. Got it Sir.. Thank you
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On 08 January 2019 at 14:05
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CA Assistant
59 Points Posted on 08 January 2019
Sir I'm transferring only money and my mother is investing that amount in FD, technically..
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On 08 January 2019 at 14:07
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150 Points Posted on 08 January 2019
Yes, You are right abhishek.
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On 08 January 2019 at 14:07


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