Gift tax

Mrunmai Deshpande (Querist) 16 January 2016 This query is : Resolved
If I give large amount of money to my earning son, does my son has to pay any gift tax? After putting that gift in Bank FD, who has to pay tax on the interest earned on that gift? Please advise.

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sanjeev kumar goel (Expert) 18 January 2016
Dear Mrunmai Deshpande if you gift any amount to your son or any of your family member the entire amount is tax free neither you nor your son or any family member has to pay any tax on this gifted amount but if the donee put this money in any bank in FD form or invest otherwise then the income earned or accrued from bank FD or investment will be the income of the donee and donee has to pay tax on that amount.

Rajendra K Goyal (Expert) 19 January 2016
Agree with the expert.

Hemant Agarwal (Expert) 20 January 2016
ANOTHER OPTION:
1. INSTEAD of making a Gift, show it as a "LOAN" given to the son.

2. The Son can invest the Loan amount and earn interest thereon and pay income tax thereon. In this case the "donee" (gift giver) is not liable to pay any income tax on the interest earned by the son.

Keep Smiling .... Hemant Agarwal
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