Tax planning via Parents Account

Taxation
1

HI @Quicko Team, it would be a nice if you can help me with the following query.

I want to do tax planning by using my parents account for investing in bonds & equities only.
Since they have very less to no income dividends can be tax free if i plan them correctly is what i hear from internet.

Question is:

  1. If i transfer any account from Son’s account to his Mother’s account i understand this is exempt under IT rules and has no limit for a given a tax year.(Is this correct understanding?)
  2. The same relation also doesnt come under the clubbing rule, is this understanding correct?
  3. Kite Zerodha platform can be used to gift the equities and bonds from son’s account to mother’s account and its completely tax free, is this understanding correct?
  4. Any income generated by these gifts like divivdends etc are taxable in the hand of the Mother.

Are there any other gothcha’s about this kind of tax plannings?

Thanks.

1 Like
2

Further question that i would like to ask, is it mandatory to show the cash amount transfered between me and parents on the ITR as exempted income or is there a limit post which i have declare that…?

@Quicko

3

Hi @pyarlath

Yes, your understanding is correct.

Clubbing is applicable only in case of transfers made to spouse and minor child. If the son is a major (more than 18 years of age), clubbing will not be applicable.

There will be no tax liability when the shares are gifted. However, wherever they are sold, tax will be applicable on the capital gains.

Yes, the income generated, both dividend income and capital gains will be taxable in the hands of your mother.

Hope this helps!

1 Like
4

Just one more confirmations, Since i have gifted securities to mother, Will they have to be declared in her ITR like will they bee shown in here AIS TIS?

and if so this income can be marked as exempted correct while filling?

5

Yes will be shown.

You can mark it as exempt. You can select family transfer as reason during CDSL transfer.