21 January 2011
a employee retiered from pnb as a head cashier. the money which he gets, he wants that money to deposit in bank as a fixed deposit... he estimates that his interest income will be around Rs150000 & pension income Rs300000. if he make F.D. in the name of his Independent children. or dependent wife... Will the Income be clubbed..??? if yes... Then what should he do to make his tax liability nil... or very low..?
21 January 2011
Rule provision given by Mr Kumar is correct. But you need to take all other relevant points including the following into consideration, if FD is made in son's name
(1) The independent son has to include Interest on FD in his income. It may finally increase tax liability since son may have been employed
(2) You may be losing the benefit of higher rate of Interest which is generally allowed to ex-employees of Banks and Sr. Citizens
(3)You will be losing "control" on funds
You may like to explore possibility of your son giving money to his mother for making FD in her name in which case her Exemption Limit could be taken benefit of
CAclubindia
