Monthly transfer to mother

[Himanshu Agrawal]

If I do online transfer of some amount to my mother (a housewife, so no income from any source) then will the interest earned by my mother on the invested amount be taxable to me in any way? Will my mother need to file income tax because I am transfer some amount and she earns some interest on it?

A clear yes/no answer, along with detailed explanation will be much appreciated. If you could link me to some official word then it would be great.

Thanks in advance.

[DR.MARIAPPAN GOVINDARAJAN]

The earning of your mother on depositing the said amount is only interest. If the interest is within the taxable limit there is no need to pay tax. However to avoid TDS by bank your mother have to submit the Form 15H.

[Himanshu Agrawal]

Thank you sir for your reply. Also, suppose yearly balance in mother's account (because of deposits by son) crosses tax exemption limit then will it attract income tax? Or income tax in her account will only be calculated based on interest earned during the financial year?

So, it means a son can evade income tax on his account by transferring some amount to her mother's account? Could you please confirm my understanding.

I would be much obliged if you could provide some reference or link which clearly quotes the same and I can read more about it.

[DR.MARIAPPAN GOVINDARAJAN]

You cannot evade tax since whatever the amount transferred to your mother is still your income. You have to pay the income tax for the same. But in the hands of your mother it would amount gift from son to mother.

[Himanshu Agrawal]

Sorry for not being clear. I mean, evading the income tax on interest earned. Suppose son keeps in his own account and he earns a interest of 10K then it will get taxed as per his slab. But he transfers same amount to mother then total interest earned will not get taxed until it crosses tax bracket. Right?

Also, once transferred amount is in the mother's account, income tax will be as per interest earned during financial year and not the principal transferred or account balance. Right?

[Ganeshan Kalyani]

I understand that the amount transferred is already offered to tax by you in your income tax return. Therefore the amount will not be taxed again in the hands of your mother. it is simply a gift. Further the interest earned will be taxed once the limit exceeds in the hands of your mother and she will have file income tax return on exceeding the income slab.

[Himanshu Agrawal]

Thank you sir for your valuable time and inputs. Few last follow up questions -

1. I saw form 15H is for people above age 60, if mother is below 60 (lets say 48) then she needs to fill form 15G. Right?
2. If interest earned doesn't exceed the tax slab then does she need to file the income tax return?
3. What are possible implications for not filing IT returns by mother?

[Ganeshan Kalyani]

Mariappan sir has mentioned Form 15H which is applicable for senior citizen. And you are mentioning Form 15G which is for everyone. Thus you have rightly mentioned. Had you been written in your query at first stage Mariappan sir would have mentioned the applicable form. And for second query, no she need not have to file return. Third - there is no implication for non-filing provided the income from interest does not exceeds the taxable limit (we understand she does not have any other source of income). Thus. now all your queries have been solved. I hope.

[Himanshu Agrawal]

Yes. Thank you so much for your time and inputs.

AI Summary

Taxation of Gifted Funds: interest on amounts gifted to a non earning parent is taxable in recipient's hands if exceeding exemption Amounts transferred from a son to his mother are treated as gifts; the principal is not taxed again in the mother's hands if it already constituted the son's taxed income. Interest arising on deposits made by the mother is taxable to the mother when such interest causes her total income to exceed the basic exemption threshold. To avoid TDS, the mother may submit Form 15G or Form 15H as applicable. Filing a tax return is required only if her total taxable income exceeds the exemption limit.