income tax

[genu nambiar]

Parents deposit fixed deposits in the name of children. when the child grows up and gets a job he has to pay income tax. then how can he declare the income from fd deposited by parents. how will they prove the source.

AI Summary

Understanding Tax Implications for Fixed Deposits: Transition from Parental to Personal Income and Gift Tax Exemption A discussion on a forum addresses the issue of income tax implications for fixed deposits (FDs) made by parents in their children's names. When the child reaches adulthood and begins working, they must declare income from these FDs. It is suggested that the deposit certificate from the bank, which includes the child's and guardian's names, can serve as proof of the source. Until the child reaches majority, the interest income is clubbed with the parents' income, and TDS is credited to the parents' PAN. Post-majority, the child's PAN is used, and the amount can be shown as a gift, thus not taxable.