Clubbing and total income of others

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ramanpreet kaur bhatia (Querist)

06 February 2014 If both the parents, mother and father gifts money worth rs.1,00,000 each in favor of major daughter, what is the tax treatment in case of daughter and each parent i.e. both mother and father?

AVTAR SINGH

AVTAR SINGH (Expert)

06 February 2014 The income arising to major daughter will not be clubbed with the income of parents. Gifts are exempt and income from gifted amount will be taxable in the hands of daughter.

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ramanpreet kaur bhatia

ramanpreet kaur bhatia (Querist)

06 February 2014 suppose there is no income from gifted amount. will the entire rs. 200000 be exempt in the hands of daughter or exempt. what is the tax treatment in the hands of each parent?

AVTAR SINGH

AVTAR SINGH (Expert)

06 February 2014 Once parents have gifted the amount to major daughter, they will no longer be asked about the income earned on that amount. Now coming to daughter, if any income is earned on that amount, then that income will be hers and she will include that income in her return.

The gift amount of Rs.200,000 received by her from her parents is totally exempt in her hands, and no one is liable to pay any kind of tax on this gifted amount.

ramanpreet kaur bhatia

ramanpreet kaur bhatia (Querist)

06 February 2014 Then, in that case is it possible that parents can gift any amount of money to the daughter to shift their tax liability to her, since in daughter's case, it will be exempt?

ramanpreet kaur bhatia

ramanpreet kaur bhatia (Querist)

06 February 2014 Then, in that case is it possible that parents can gift any amount of money to the daughter to shift their tax liability to her, since in daughter's case, it will be exempt?

AVTAR SINGH

AVTAR SINGH (Expert)

06 February 2014 Don't use word 'Exempt', but yes if the income will be below taxable limit, the tax liability of daughter will be Nil.

ramanpreet kaur bhatia

ramanpreet kaur bhatia (Querist)

06 February 2014 yes, but i am still not clear. say,both mother and father can gift higher amount also so as as to shift their high taxability towards say, moderate tax liability of the daughter? can be more than 100000 rs. each?

AVTAR SINGH

AVTAR SINGH (Expert)

06 February 2014 Raman Ji, Amount of gift is immaterial. Whether it is one lakh, ten lakh or ten crore, it is exempt due to their relationship of daughter and parent. It is not taxable gift u/s 56(2)(vii).

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