If you have invested in the name of your child, the income from those investments gets added to your income while income tax filing. All you need to know.
Edited transcripts
Udayan Ray: Hi there! Welcome to FundooMoney web series on tax filing. We are discussing various things that you need to keep in mind when you file your taxes. The idea is to make tax filing far more tax-free than it normally is. Now, one of the things people in India tend to do is save for children. A lot of the investments are made in the name of the children. What do you do if it starts making which you are wanting them to do? What does the taxman do? What is the tax treatment? How do you file your taxes? Do these investment incomes make their way into the tax filing you are doing?
To help us figure things out, we have got tax expert Swami Saran Sharma with us. Welcome, Swami!
Swami, a lot of Indians save in the name of their children. When the investments for your children is done in your name, there is a separate tax treatment. What happens if you have invested in the name of your children? How does that pan out in tax filing
1:08 Swami Saran Sharma: A child is not an assessee (taxpayer) in his or her own right. All that income earnings, since the source is the parent, all that money is included in the parent’s income. If the father has gifted that amount, it is added to the father’s income. Or, it is added in the mother’s income—whosoever is providing the source of the money.
Udayan Ray: So, whosoever has provided money for that particular investment, we are talking about the parents, the investment income get clubbed with that person. So, that does clear a few cobwebs. Thank you so much, Swami.
There is actually a lot more information on tax filing that we are letting out that’s all out in our social media platforms. And of course, it is there at our website www.fundoomoney.com.
