I’m a senior citizen. If I make a hard and fast deposit within the title of my grownup son, who can be liable to pay tax on the curiosity from the FD?
The transaction can both be handled as reward or a mortgage. In case you give this cash as reward to him, there won’t be any tax implications for you as reward acquired from specified kinfolk together with guardian are tax free within the arms of the recipient. The clubbing provisions may even not apply as your son is grownup.
Alternatively, you may advance this cash as mortgage to your son which then may be invested by him in FD and which shall be taxable in his hand. The mortgage may be curiosity free or curiosity bearing mortgage. Please word that in case you give an curiosity free mortgage and are already paying any curiosity on the cash borrowed, advancing of curiosity free mortgage won’t work because the assessing workplace could disallow your declare for proportionate curiosity paid relatable to the curiosity free mortgage.
Please word that simply by gifting the cash to your son, which is exempt in his hand, you’ll lose your proper over your cash.
In case you don’t intend to deal with this transaction as reward or a mortgage, the earnings tax officer could membership the curiosity earnings making use of the provisions of Part 60 which covers the circumstances of switch of earnings with out switch of the underlying asset.
Balwant Jain is a tax and funding knowledgeable and may be reached on jainabalwant@ gmail.com and @jainbalwant on Twitter
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