INTERVIEW QUESTIONS TAX GIFT TAX DETAILS

Question: How to benefit legally from Gift Tax Exemptions?

Answer: 1. Income earned on invested gifts is not clubbed with donor’s income, if the investment in tax-free. Invest in PPF, EPF, listed shares or tax-free bonds as a gift in in your spouse’s name. Any interest earned on PPF or long-term capital gains earned on sale of bonds or equity shares will be tax-free.

2. Gift an investment or loan interest-free money to parents or siblings, especially when their total income is below the relevant threshold levels. Any income earned from the gift such as house rent or interest income will be chargeable as their income from other sources. They may end up paying zero tax, even after accounting for income earned from your gift or loan.

3. Gift an investment or give interest-free loans to children who are 18 years and older. They should ideally be still studying or earning less than you. Any income earned from this gift will be taxed in their hands and not clubbed with your income.

1. Income earned on invested gifts is not clubbed with donor’s income, if the investment in tax-free. Invest in PPF, EPF, listed shares or tax-free bonds as a gift in in your spouse’s name. Any interest earned on PPF or long-term capital gains earned on sale of bonds or equity shares will be tax-free.

2. Gift an investment or loan interest-free money to parents or siblings, especially when their total income is below the relevant threshold levels. Any income earned from the gift such as house rent or interest income will be chargeable as their income from other sources. They may end up paying zero tax, even after accounting for income earned from your gift or loan.

3. Gift an investment or give interest-free loans to children who are 18 years and older. They should ideally be still studying or earning less than you. Any income earned from this gift will be taxed in their hands and not clubbed with your income. Source: CoolInterview.com

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