No rebate on gift to mother

S C vasudeva

I am a Class-I Punjab Government Officer paying tax @ 20% to 30% bracket.

1. How much amount can I gift in a year or subsequent years to my mother who is a housewife and not an income tax assessee? What is tax liability on both and the procedure for gifting the amount.

2. Can she deposit the amount in her SCSS/FD account or use the money for construction on a vacant plot in her name?

3. Is gift deed necessary and what is the format of gift deed?

— s aggarwal

A. (a) You can gift any amount to your mother. However, the amount so gifted will not be allowable as deduction from your total income.  You will thus be liable to pay tax on your total income without any deduction in respect of the amount so gifted. The donee i.e. your mother will be liable to pay tax on the amount of interest, if any earned on such gifted amount if her income exceeds Rs 3,00,000 for the relevant assessment year.  It is presumed that she is a senior citizen to whom the higher limit of Rs 3,00,000 will be applicable.

(b) Your mother can use the amount so gifted for any purpose she desires.

(c) A gift deed is not required for gifting a moveable property. A letter in confirmation of the gift made by the donor and an acceptance letter from the donee would suffice for the purpose of making a valid gift. The gift should be made by an account-payee cheque and the letter should disclose the Permanent Account Number and complete residential address of the donor as well as of the donee.

I opened a PPF account with a bank in 1988 in the month of March.  I got it extended twice but did not seek any withdrawal from the account during these extensions.  Now, in April 2017, I applied for withdrawal payment.  Kindly guide what percentage portion shall I get and which date of balance will be accounted for payment.  

— surinder kumar

A. You have completed a period of 15 years as far as deposit in the PPF account is concerned.  Therefore, in accordance with the sub-rule (3B) of Rule 9 of Public Provident Fund Scheme 1968, you would be entitled to withdraw an amount once every year subject to the condition that total withdrawals during the five years block period shall not exceed 60% of the balance in your account at the commencement of the said period. 

Q. I am 75 years old pensioner.  My queries are as under:

1) Whether deposit in Post Office Senior Citizen Saving Scheme is admissible for rebate u/s 80C of the Income Tax Act.

2) Whether I can deposit in PPF account of my son (major) for rebate u/s 80C of the I-T Act. — sk gupta

A. (a) A deduction under Section 80C of the Income-tax Act 1961 (The Act) is allowable within the permissible limit of Rs 1,50,000 in respect of the deposit made with Post Office under Senior Citizen Saving Scheme.  

(b) You can deposit an amount in PPF account of your major son and deduction under Section 80C of the Act in respect thereof would be admissible within the permissible amount specified in Section 80C of the Act.