No limit on gift to mother

SC Vasudeva

Q. How much amount a tax-payee son or daughter gift to his/her mother (senior citizen housewife) for her future expenses per year? What should be the procedure for the transfer of funds? Please advise. — Ms Rajni

A. An individual assessee can gift any amount to his/her mother without involving any tax liability in the hands of the donor or the donee. There is no limit up to which gift can be given to the mother by a son or a daughter.  The gift can be made by simple letter along with which the cheque for the gifted amount should be enclosed.  The letter should give the complete residential address and Permanent Account Number of the donor. An acceptance letter should be obtained from the donee i.e. the mother to whom the amount has been gifted.   The acceptance letter should give complete residential address, details of bank account in which cheque has been deposited and Permanent Account Number of the donee. The gift should be made by an account payee cheque or an account payee draft.

Q. My age is above 81 years. I got two life insurance policies as proposer on the life of my son/grandson with the aim of investment-cum-life cover. Premium of Rs 50,000 each was paid from my income of Rs 62,500 after paying income tax @20%. The return on maturity/payout of Rs 45,000 and 38,000, respectively, per premium is being clubbed u/s 10(10D) with my income of the year of receipt, and being taxed @20% (30% if the taxable income exceeds Rs 10 lakh,) with net return of Rs 36,000 and Rs 31,400 per premium of Rs 50,000 i.e.(Rs 62,500 of taxable income).  Kindly compare it with another policy where the return per premium of Rs 50,000 will be Rs 100,000 and that too will be tax free u/s 10(10 D). In the 1st case, I will be paying income tax twice which is unjustified. Can I claim any relief? — Dr Nirmal Singh Aneja

A. Section 10(10D) of the Income-tax Act, 1961 (The Act) provides that any sum received under life insurance policy, including the sum allocated by way of bonus on such policy is exempt from tax other than any sum received under insurance policy issued on or after the first day of April 2012 in respect of which the premium payable for any of the years during the term of the policy exceeds 10% of the actual capital sum assured. You have not indicated the amount of actual capital sum assured in respect of the policies taken by you to cover the life of your son and grandson. It is, therefore, not possible to compute the amount which should not be taxable under Section 10(10D) of the Act.

Q. My wife had purchased a plot in Hyderabad in 1990. She expired in 2003. I have three children, one settled in Canada. Due to Army career, involving frequent postings, I could not sell the plot. Now I am retired and settled in Chandigarh, I wish to sell the plot. Plot is still in my wife’s name. Please advise what actions I have to take. — Sukhwant Singh

A. The ownership of the plot being in the name of your wife who had died in the year 2003, it would be essential for you to get the ownership of the house transferred in the name of the legal heirs of your wife, which would include yourself and your children. You would be able to sell the plot after such legal ownership is transferred as the buyer would need a clear title to the plot. In case the buyer agrees, you may get the mutation done in the name of the legal heirs in the revenue records and sell the plot. It would, however, be advisable to get the legal ownership transferred through the court by obtaining a succession certificate.

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