What is the taxation on any gift via cash transfer to a relative?
₹22 lakh last year from our savings accounts to the bank account of our grandson, a minor. We plan to transfer a similar amount every year for a couple of years.Will income tax form 26AS capture these transactions. What documents should we produce to prove this if the tax department seeks an explanation, and is there any gift deed format for such transactions? —Sridharan Subramaniam As per the provisions of the Income-tax Act, any sum of money gifted by you and your spouse to a specified relative (including son or grandson), will not constitute taxable income in the hands of the recipient.
Documents such as registered gift deed, copy of bank statements showing the transfers, etc. may be maintained for income-tax purposes. A gift deed, if you opt for one, should ideally include details of the relationship of the donor and donee, purpose of the transfer, amounts transferred, date and mode of transfer etc.
With respect to the format and execution of the gift deed, it would be advisable to seek separate legal advice. I have a fixed deposit (FD) of ₹10 lakh and am paying taxes on the interest accrued on this. Can I open a bank account in my the name of my wife, a homemaker, and transfer this amount to her account and thereafter start a new FD from her account.
In this way, will we be able to save on taxes? What will happen in the same scenario if I keep the ₹10 lakh in my wife’s savings account and not opt for an FD? —Lovelesh Saxena It is assumed from this query that you wish to transfer ₹10 lakh to your wife’s bank account as a gift. It is worthwhile to note that as per the provisions of the Income-tax Act, any sum of money gifted by you to your wife will not constitute taxable income in her hands. However, in light of the
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