Gift money to your adult child and save tax!

Gifting money to your adult children would not only bring a smile on their faces but you will also get tax benefited! Isn’t it a cool way to save your tax? Well, here’s how you can avail tax benefit by gifting money to your major child i.e child who has completed 18 years of age or more.

Any gift including money to your major child is exempt from tax. Clubbing provisions are not applicable in case of major child.

Click here to know about Clubbing of income.

If you gift any money to your major child and if he invests that money in any assets or investments or fixed deposits, then income from such assets or investments will be taxable in his hands and not in the your hands as a parent. Major child if, he is still studying and not earning any income or income earned by him is below maximum amount not chargeable to tax i.e Rs. 2,50,000/-, then that income is exempt in his hands as well.

Let us understand with the help of an example:- Mr. Ramesh gifts his major child Amit, a sum of Rs. 3,00,000/-. Amit then invests this money in fixed deposit and earns interest of say, Rs. 15,000/- on it, having no other income at all. Then, this interest income earned is not liable to tax in his hands as well. And the sum of Rs. 3,00,000 gifted by Mr. Ramesh to Amit is already exempt as per income tax provisions.

So, go ahead and gift your major children and be doubly benefited!! In case you have any query regarding this topic or any other Income-tax provisions, you can raise a ticket on myITreturn.com and get your query solved.

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Gift money to your adult child and save tax!
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Gifting money to your adult children would not only bring a smile on their faces but you will also get tax benefited! Isn't it a cool way to save your tax? Well, here’s how you can avail tax benefit by gifting money to your major child i.e child who has completed 18 years of age or more. Any gift including money to your major child is exempt from tax. Clubbing provisions are not applicable in case of major child.
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