Dear Sir,

We would like to have very specific clarifications ( Given below ) with regard to GIFTING AND TAX IMPLICATIONS.

( 1 ) Both myself and my wife are Income tax assesses. We have invested in bank fixed deposits (minor’s name) and presently all the interest ( quarterly ) from these F.D’S ( Minor ) are clubbed to our earnings for Income tax purpose. My elder daughter will become a major ( 18 Years ) this August 24, 2012.

( 2 ) We would like to gift all the F.DS to our elder daughter after September 01,2012. Open new bank account in the name of our elder daughter ( jointly with us ) and request bank to credit F.D interest ( quarterly ) after September 01, 2012 to our daughter’s account ( presently interest is being credited to our bank account).

( 3 ) We have previously taken an Insurance policy in the name of our elder daughter ( gift ) and the same is going to be matured in January 2013. Maturity proceeds of policy will also be invested (elder daughter’s name) in bank fixed deposit. ( For F.Y : 2012-2013 – F.D Interest up to September 01, 2012 will be clubbed to our earnings for Income tax purpose ). From F.Y : 2012-2013 our elder daughter will have to independently file income tax returns only if her income exceeds Rs. 190,000/= ( present limit)

Kindly advise us if our understanding is correct on the above matter, if not, please guide us correctly.

Your early reply will be highly appreciated.

Thanks,

Regards,

Mrs. & Mr. R.V. Kamath
<....clipped for privacy...> ( M )
<..clipped for privacy>mail.com



Admin’s Response:

Your understanding is absolutely correct. From the date she becomes major, she can attribute the bank interest in her name and include in her own income.