Your taxes

I am 25 and my mother transferred some shares from her demat account to my demat account a few months back. What would be the tax implications, if any, on this transfer? I have not yet sold any of the transferred shares.

Pradeep

According to the provisions of income tax law, where any property (including shares) is received without consideration by an individual in any financial year, the aggregate fair market value of which exceeds ₹50,000, the whole of the aggregate fair market value of such property shall be chargeable to tax under the head “Income from other sources”. The said provisions are not applicable to any property received from any relative as defined in the relevant provisions.

In your case, the shares received by you from your mother without consideration will not be treated as income in your hands, as “mother” is covered under the definition of relative. Any income earned by you from the shares on account of sale or dividends shall be taxable in your hands as per the relevant provisions of the law.

I have transferred some amount to my major daughter's account and opened FDs in her name with it. This money is kept as a reserve fund for her marriage. She is an independent tax assessee and earns a salary by working in a company, but does not fall in the minimum tax bracket. Please clarify as to whether the interest earned on FDs is to be clubbed with my income or to be clubbed with her income for tax calculation purposes.

Suresh Babu

According to the provisions of income tax law, where any sum of money, the aggregate value of which exceeds ₹50,000, is received without consideration by an individual in any year from any person, the whole value of such sum shall be chargeable to tax under the head “Income from other sources”. The gift so received is not taxed in certain cases, e.g. if any sum of money is received from any relative as defined in the relevant provision.

Also, any income that arises or accrues to a minor child of the assessee is included in computing the total income of the assessee.

In your case, the gift received by your daughter falls under the definition of gift received from a relative (i.e. father) and hence is not taxable in her hands. Since your daughter is a ‘major’, the clubbing provisions are also not attracted. The interest income earned by her from the fixed deposits opened through funds gifted by you will be taxable in her hands.

The writer is a practicing chartered accountant. Send your queries to >taxtalk@thehindu.co.in