Does Transferring Money To Parent Invite Tax In India

Gifting money to specific relatives or investment in their names can generate considerable tax benefits. While gifts received by any person above Rs 50,000 is taxable, there are specialised exemptions for gifts to whatever specific relatives care children and parents.

While gifts received by whatever person higher up Rs 50,000 is taxable under the head 'income from other sources' under taxation Laws in India, there are special exemptions for gifts to some taxon relatives like major children and parents. (Photo: Mimetic image)

There are more ways in which individuals in India derriere save tax under various sections of the Income Tax Act. One such way to reduce task outgo is by gifting money OR investing in the name of specific relatives.

Experts, however, hint that it is better to invest the talented money as it not exclusive helps in saving tax but also generating nontaxable income under various sections offered under I-T laws in the country.

While gifts received by some person above Rs 50,000 is taxable under 'income from other sources' under tax Torah in India, there are special exemptions for gifts to some specific relatives like major children and parents.

Also Read | Explained: How family members fanny help you save more than tax

It may equal noted that any amount is given to relatives like parents, major children and parents-relative-in-law can not only generate entirely tax-free from them but also reduce your total tax outgo. In the case of parents/parents-in-constabulary, the money you intend to indue should ideally comprise invested with in tax-exempted instruments.

Any investment in the bring up of your parents or children can help in deliverance tax and even generate tax-free internet income. There are many slipway in which investment or gifting money to your parents/parents-relative-in-law can bring fine-tune your tax financial obligation.

Forward that both your parents are senior citizens aged above 60 years, the basic tax exemption for them will live Rs 3 hundred thousand. It is Rs 5 lakh for superior senior citizens, who are aged above 80 years.

If both of your parents do not have a high income, so you can avoid revenue enhancement by gifting money to them. They stool then use this money to invest in their name in tax-free schemes and earn an additional interest income. If the income attained is below Rs 5 100000, they don't have to pay tax on IT.

You can likewise invest in the name of your parents in PPF scheme if you have exhausted your own limit of Rs 1.5 lakh. This will help you far reduce your revenue enhancement outgo.

Also, if you have a surplus of John Cash, you john also place in your child who is above 18 years or above. Rather than gifting them money, you can invest the same amount of money in their name. The money will not attract whatsoever gift tax.

Assuming that the child does non receive an income of his/her possess preceding the taxable threshold of Rs 2.5 100000, whatever income earned after the money is investment will not qualify for taxation.

Also Read | ITR Filing: Important dates to roll in the hay for filing Income Tax Returns

Also Read | ITR Filing: How to register yourself on Income Task e-filing website

Click hither for IndiaToday.in's complete coverage of the coronavirus general.