Hello sir, very thanks in advance
Please resolve my below query
- Son gift money to mother , and mother use that money for swing trading and few extra activities and earn some profit . And after that she gift money back to her son. Whats provision applied in such scenario.
- And 2nd thing son gift 5 lakh to mother and mother had already good amount in her own balance.and she trade with 2 or 3 lakh .
- Can still I have to be justifiy above mentioned gift transfer for clubbing.
- And are there any limit in gift transaction between relatives, I mean number of transaction, not amount.
I waiting your kind reply
First of all very thanks for your kind reply.
Mam please Take a glance once more on my query and please answer remaining part of my query.
I mean, It’s very clear that clubbing provision and limitations are not applicable between very near relatives, in my query Mother and son ,
But mam are It’s not fall in clubbing provision if mother do trading and earning. Hence mother report all his gain as per income tax law. And is it mandatory or any provision like Gift deed or any other gift transfer relative documents to be draft.
Thanks and regards again
Hi @Kuldeep_Kumar,
Yes, in your case, the mother can use the gifted money for stock trading. The profits will be taxable in her hands and she’ll have to file the ITR and report the earnings.
There’s no such limit on the amount of money that can be transferred. A gift deed isn’t mandatory as well, however, if the amount is high, it may be better to get a gift deed registered.
Thanks a lot mam
Where to shows these exempt gift income in ITR 2 for Receiver and
is donor also report these exempt gifts income anywhere in his itr
And what you suggest for previous 2 or 3 years gifts those he not reported in ITR in respective years.
And should be a final and important query is
Are children of Single father and two mothers are sister and brothers in income tax provisions or not.
I mean step mom’s childs
Hello
I want to gift my wife amount of 9 lakhs and she will invest in equities for long term. I am aware that I have to pay tax on returns. But does that amount needs to be added in LTCG or other sources.
Because LTCG there is exemption but for other sources it is going to cut 30% tax.
Hi @Venkat298,
As the amount will be invested in shares, the profits will be considered capital gains. Hence, if the shares are sold after 12 months, the profits will be classified as LTCG and will be taxable at flat 12.5%.
Last year in May 2024 I gifted some shares to my daughters (Zerodha to Zerodha) now I could see that by giving those shares to my daughter I have increased my tax liability. What is the provision as per Tax Laws? If I do not pay any tax can then my pay LTCG or STCG as the case would be when she will sell the shares in future?
Thanks
Hello @NEERAJ.sumaan ,
The shares you gifted to your daughters are not taxed, since gifts from specified relatives are exempt.
But if those shares are sold, here’s how the tax will work:
- If your daughters are below 18 years of age then the profit from selling the shares will be added to the income of the parent who earns more, and taxed accordingly.
- If they are 18 years or older, the profit will be taxed in their own ITR.
Hope this helps
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Thanks. It is news for me. But do these modern day apps including Zerodha will keep a tab on this and inform us as and when any transaction button is hit or we would be required to maintain manual records. If at all we have to maintain manual records, how and why an average individual is supposed to do that.
Cheers
The clubbing provisions under the Income Tax Act indeed apply to gifted shares. If a person gifts shares to their spouse or minor child, any income earned from those shares, like dividends or capital gains, is added to the donor’s income and taxed accordingly. This prevents tax avoidance through gifts.
Yes, the clubbing provisions apply if a person gifts shares to their spouse or minor child; any income from those shares is taxable in the hands of the giver.