FD in name of blood relative

This would be considered as a gift to your sister from her father mother and brother and since she is a major such income won't be clubbed in the income of her parents and thus you can clearly take benefit of slab rate and save some tax. This is tax planning.

Even if there is no tax liability you will have to prepare gift deeds showing the gift given to your sister and your sister will show them as exempt income from her relative. Also have a documented proof of gift which shows the cheque number through which gift was given so that if anyone asks you can show bank statement and gift to prove the gift given and received.

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Thank you

1. Yes, it will qualify as a gift without any tax liability. However, she will have to show it in her return as an exempt income.

2. No, there will not be any clubbing provisions in this case.

A gift deed is recommendatory for the gift.

Dear Chetan,

Hope you are doing well !

1. Yes, it will be treated as gift from relatives. Gift from relatives are exempt u/s 56 of the income tax act. She will have to show this income in her return under exempt income head. However, please make sure that the gift deed is executed properly for future reference.

2. No, there will be no clubbing in your case.

Thanks & Regards,

Payal Chhajed

Hi,

1. There is no tax liability.Gifts from relatives are Tax-Exempt. Always get the documentation done when there is an exchange of gifts. It would be easier to convince an assessing officer at the time of tax scrutiny if the written proofs are ready.

2. There is no clubbing in this case.

Hi Chetan,

1. The amount you give her will qualify as a gift and hence there would be no tax liability. Gift to relatives is exempt from tax.

2. No clubbing provisions in this case.

However, it is recommended that you prepare a gift deed for the gift.

Regards,

Nikhil

Hi

What ever interest is earned will attract clubbing provision of income tax act and will be taxed in your hands ,in ratio of your contribution in fd.

Fd principal amount can be declared as gift in her hands which will be tax free.Proper gift deed need to be kept for supporting transaction.

Hope it helps

Hi,

- Gift to a sister and child for parents will be exempt in her hands but she need to show it in her ITR under exempt income. Draft proper gift deed.

- In respect to clubbing provision, no clubbing for interest on FD would be done in the hands of the parents but for your share as brother would be clubbed in your ITR.

- No deduction u/s 80C would be available to parents and you for FD in her name.

Thanks

Prepare gift deed exempted as relative

Pls find below answers:

1. No tax liability.

2. Clubbing provisions wont apply since she is not Minor.

You need to keep FD Advice copy.

Hi,

1. There is not tax liability on gift received from relatives. However, recepient will have to show it in his ITR.

2. No, it won't come under clubbing net.