ITR Filing Latest News: As the time for filing of Income tax Returns is nearing, many individuals are worried about saving their tax. There are many simple ways by which they can do it. One such simple way is by gifting money or investing in the name of specific relatives. In this way, you are also adding beauty to your relationship with your kids and parents or relatives. Also Read - Income Tax, Merger of More Banks: Here’s What to Expect From First ‘Paperless’ Budget 2021
Experts dealing with I-T matters say that it is better to invest the gifted money as it not only helps in saving tax but also generating tax-free income under various sections offered under I-T laws in the country. Also Read - Pay Penalty if Not Already Filed I-T Returns, No More Extensions Now
However, it should be noted that any amount is given to relatives such as parents, children and parents-in-law can not only generate entirely tax-free from them but also reduce your total tax outgo. In such cases, the money you intend to gift should ideally be invested in tax-exempted instruments. Also Read - Will Tax Exemption Limit Be Raised? All Eyes on Union Budget 2021
As per the tax laws, the any gift received by any person above Rs 50,000 is taxable under ‘income from other sources’. However, there are special exemptions for gifts to some specific relatives like major children and parents.
Moreover, if your parents are senior citizens aged above 60 years, the basic tax exemption for them will be Rs 3 lakh and it is Rs 5 lakh for super senior citizens, who are aged above 80 years.
In case your parents don’t have high income, you can gift money to them on monthly basis and can avoid tax. On the other hand, they can then use this money to invest in their name in tax-free schemes and earn additional interest income. Moreover, if their earned income is is below Rs 5 lakh, they also don’t have to pay tax.
Moreover, if you invest in the name of your parents in PPF scheme, you can save your tax outgo as well.