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money received from son...is it taxable which further i invest in fixed deposit

14 September 2016

my son who is working in dubai and has transfered 10 lakh in my bank account ...so please advise should i have to pay any tax and also my son has to pay tax when he back to india

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6 Replies

Abhimanyu (CA) (316 Points)
Replied 15 September 2016

Thanks for the query Mr. Desouja,
1. The remittance is not liable to tax in India as it is mere transfer of money you in India haven't earned it here and nor your son has earned it in India,
He has earned such money in Dubai and he will be taxed there only.
2. When your son comes back to India he will not be required to pay any tax on this amount(assuming the transfer is made by himself and his company to India)
3. Income on FD will be normally taxed.

Hope you have an idea about taxability of such transfers, should you have any issue please revert back,

Thanks,
Abhimanyu

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mohammad rasool baig (Management Consultant) (1026 Points)
Replied 16 September 2016

Please keep in mind the following points

1. Needs to raise gift deed between you & your son. Then only the transaction will have legal recognition.

2. If you get any income like interest etc through investing gifted income, then clubbing provisions will be applicable.

Please follow the link for more clarification regarding gifts

https://incometaxreturnindia.com/income-tax-on-gifts/#.V9uDbVt97cc

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Albert Desouja (B.Com) (78 Points)
Replied 16 September 2016

Dear Abhimanyu

as yu said remittance is not taxable but if i invest that money in fixed deposit only the interest will be taxable which i will earned.

but what is clubbing provision as mr mohammad repl

Abhimanyu (CA) (316 Points)
Replied 16 September 2016

Thanks for reverting, good evening,
Unfortunately, Mr. Baig is not correct, as amount received from your son ie. its gift for you and such an amount becomes your property here and such a gift (from son) is not taxable in India,
later the Interest income is taxable in YOUR hands only.
No provisions relating to clubbing shall be applicable, (clubbing means taxing income in the hands of real earner not the one in whose name/account it is credited, like Mr. x create an FD in the name of his Wife and interest is credited in her, Mrs. X's, account but still for income tax purposes such interest will be included/clubbed in the income of Mr.x and not her wife)
Hope above answer helps,
Please revert if any issue.
Thanks,
Abhimanyu

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mohammad rasool baig (Management Consultant) (1026 Points)
Replied 16 September 2016

Thanks for correcting Abhimanyu.

Yes. Clubbing provisions will not be applicable in the above scenario. Hence it will be taxable in parents hands only.

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Albert Desouja (B.Com) (78 Points)
Replied 19 October 2016

please advice as per indian income tax section 56 (2) which said gifted income more than 50000 or property is taxable in the hand of receiver but that clause shall not apply to any sum of money received from any relative...again that section specified "relative means":

a. spouse of the individual
b. brother or sister of the spouse of the individual
c. brother or sister of either of the parents of the individual
d. brother or sister of the spouse of the individual
e. any lineal ascendant or descendant of the individual
f. any lineal ascendant or descendant of spouse of the individual

so need yur advice will that money which i have received from son is treated as gifted money and sure receiver have not to pay any tax on that miney