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Transferring of capital

phanindra kumar (Student CA Final ) (85 Points)

19 November 2014

Hi sir,

Mr.Father has a capital of Rs.10L in his statements of affairs , he is transfering Rs.6L to Mr.Son to build son's capital .

Kindly let me know in this sinario how tax will applicable and in whose hands .

Thanks in Advance ,

K.Phanindra kumar

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2 Replies

Mihir (Wealth Manager) (5293 Points)
Replied 19 November 2014

Father may prepare a gift deed to gift Rs. 6 lacs in favor of his son. This gift will not be taxable in the hands of the son.

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Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 19 November 2014

Mihir is correct. Your son will come under definition of Relative for Income tax purpose, Hence gift to him will not be taxable in the hands of your son. Gift to Relative or Non Relative will be treated as appropriation out of Post tax income. Appropriation can not be taken as deduction while computing Income tax. Hence father can not take deduction of gift he made to his son. As it is cash, you need to prepare gift deed in favor of you son. It need not to be registered as Gift of Immovable property only requires registration as per Transfer of property act and the Law relating to Registration of Documents. Thank you!