Can I gift money to my father and minor son? Can the investment in their name earn tax-free income up to Rs 2.5 lakh?
Under the Income Tax Act, where an individual transfers any asset (including cash) to his or her spouse otherwise than for an adequate consideration or as gift, the income earned from that asset is considered as income of the transferor for taxation purposes under the clubbing provisions. Similar clubbing provisions apply in case of transfer of asset/cash to the minor son. However, you will be able to claim deduction of Rs 1,500 per child against the taxable clubbed income. However, in the case of transfer of asset/cash from son to father, the clubbing provisions do not attract and, therefore, income earned thereon will be taxed in the hands of father only.
If I sell two one-BHK houses in my name and buy a new flat jointly with my wife, can I claim capital gains exemption on both the older flats?
Section 54 of the Income Tax Act, provides an exemption on taxation of long-term capital gains arising from sale of a residential house. To claim exemption, you have to buy one house within one year before or two years after the date of sale or construct one residential house within three years after the date of sale. To save capital gains tax earned on sale of two one-BHK flats, you can purchase one flat (new house) within the prescribed timelines. In case you purchase the new house jointly with your wife you can still claim the exemption.
The views expressed are expert's own. Send your queries to yourmoney@bsmail.in
