• Gift

I am an adult male in 40s and wish to gift (write a check from bank) for Rs 65 lacs to my mother. This is all the money I have in FD assets in State Bank. Most of this can actually be called as my mother's money from my latefather and my maternal grandfather because over the years she never opened a bank account till recently and this money has grown to this amount. The reason to do this is I do not want to keep anything in my name in case I face a divorce or any other situation where anyone can come after me for money. My mother will create a WILL to then bequeath this to my children. I cannot give this directly to children now due to family reasons. Can you please explain if this is clearly possible and if I or my mother will have to pay any tax on this gift ? Can this create inquiry and hassles from any IT dept or from Bank ? Do my children have to pay tax whenever they inherit this money? I want to understand what all may happen with this action. What else should I be aware of that this gift can trigger ?
Asked 4 months ago in Income Tax from United States

First of all by undertaking this transaction none of the party to this transaction will face any tax implication i.e. no tax is to be paid on any gift transaction between relatives.

Also when your children will receive such amount from your mother they will not have to pay any tax in India.

You only need to keep in mind and prepare proper gift deed to document this entire transaction so if there is any enquiry you can answer.

I am assuming that your mother has never filed any income tax return since she has never opened a bank account so there might be an enquiry about receiving such a huge amount but that's normal and having a proper registered deed will help to answer them.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
1486 Answers
16 Consultations

5.0 on 5.0

Hi

Yes, you can gift such money to your mother. Your mother needs to show this as exempt income in ITR. There would be no tax levied- neither to you nor to your mother.

Considering your case, it is recommended to execute a gift deed for such transaction.

Any enquiry won't be a cause of concern if the gift deed is executed and you have sufficient proofs for source of such money as FD in your hands.

When your mother gifts such money to your children, it will not be taxable for them.

Lakshita Bhandari
CA, Mumbai
3056 Answers
139 Consultations

5.0 on 5.0

Hi

Yes, you can gift money to your mother. Execute a valid gift deed for the transaction. Gift to relatives is exempt from tax. You and your mother, both don't have to pay any taxes on these transaction. 

Your children will also not be liable for any tax for money received inheritance. 

 

 

Hope it helps 

 

 

Swati Agrawal
CA, Mumbai
1044 Answers
4 Consultations

5.0 on 5.0

Hi,

 

Hope you are doing well !!

 

There will be no tax liability on the same.

 

She just needs to report it as an exempt income in ITR.

 

Though it is not compulsory, it is best to execute the gift deed on a non-judicial stamp paper of appropriate amount for legal record and to avoid any tax queries in the future.

 

Payal Chhajed
CA, Mumbai
2217 Answers
24 Consultations

5.0 on 5.0

Hi,

- Yes you can gift money to your mother and then your mother to your children's. There would not be any tax on such gift unless income will be generated from such gift amount. Draft a proper gift deed and get them registered.

 

Thanks

Vivek Kumar Arora
CA, Delhi
2520 Answers
112 Consultations

5.0 on 5.0

Yes I think you can just write a letter with your sign and freeze the actions of other two if they are not with your permission since you are the first account holder.

You can have a word with the manager and he might help you but it is possible.

Naman Maloo
CA, Jaipur
1486 Answers
16 Consultations

5.0 on 5.0

Hi,

 

Yes, you can do it by just writing a letter to the bank.

Payal Chhajed
CA, Mumbai
2217 Answers
24 Consultations

5.0 on 5.0

Dear Sir,

 

Understanding your questions i summarise facts as following

- You have sum of money which you want to be used for the benefit of your self and your children

- You fear that this money can be claimed by some one else if it lies in your account

- For the purpose you want to gift this money to your mother and going further make a will in her name to transfer it to your children

 

In the planning you are suggesting following will be implications

a) Gifting your mother will be subject to tax in her hand 

b) Same money inherit to your children will be without any tax liability and they will enjoy it without any tax

 

I would rather suggest following :

 

- Create a Family Trust with you and your mother being trustee and your children being beneficiary of trustee

- Donate this entire amount to trust , it will be 100% Tax free

- Income earned out of this amount shall be tax in the hand of trust and Same can be utilised for benefit of your children only

- No one can ever claim this amount thereafter even after your mother demise or if any thing happen to you and your children can enjoy its benefit without any tax hassel

 

 

Vishrut Rajesh Shah
CA, Ahmedabad
697 Answers
15 Consultations

5.0 on 5.0

Form is available at the bank to change particulars in the account. You can remove both the joint holders from the account. It would be better to remove them instead of freezing the account due to exigencies in life.

Vivek Kumar Arora
CA, Delhi
2520 Answers
112 Consultations

5.0 on 5.0

Dear Sir,

 

I think since it is joint account then MOP i.e Mode of operations and operating instructions needs to be given to the Bank duly signed by all the account holders.

Bhagyashree Kankaria
CA, Pune
35 Answers
8 Consultations

5.0 on 5.0

Hi

 

Yes ,such option are available in case of joint accounts.You can get in touch with bank officials for complete process.

 

Swati Agrawal
CA, Mumbai
1044 Answers
4 Consultations

5.0 on 5.0

The gift given by any lineal ascendant or descendent of the individual is not taxable.  Considering, that the amounts are received in bank, it would be good to create adequate documentation to justify the same.  It would be helpful, if your father or maternal grandfather has any will to justify that the money belongs to your mother.  If no such documents exist, since these are bank entries, it is easy to substantiate the flow of funds.  Hence, you can make a gift deed in your mothers name and transfer the funds. There is no tax on money from inheritance. 

 

As regards operation of bank account, each bank has their own protocols for joint account operation.  Please check with the bank whether the letter submitted by you is acceptable. You may not be able to debit freeze unless consent is taken from other holders, please check with bank.

Jasmina Jain Shah
CA, Greater Mumbai
280 Answers
3 Consultations

5.0 on 5.0

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