Want to understand Tax structure

Dear,

As per Section 56(2)(vii), any amount paid by a relative as a gift without consideration is not taxable under the Income Tax Act, 1961. Also, agricultural income is exempt from tax under the Act. Therefore, any amount paid or transferred by a relative which includes father-son relationship is not taxable under the Income Tax Act, 1961. In addition to the above, one must make sure that the income so transferred should be subject to tax, if any, in the hands of the person who has earned or received such amount in the first place. That means the person who is transferring the amount should have the money in white, duly incorporated in his accounts, because if not, even you may be penalized if found guilty in a scrutiny.  If the amount has been furnished in the ITR or is subject to tax, and the tax has been paid duly on the rightly earned and claimed income, then the transfer of it shall not be taxable again. The investment in MFs and FDs is merely an investment in the name of the father or son, which is allowed as deduction u/s 80C of the Act. Hope this helps you.

Regards