No tax on gift to grandson

My two grandsons have sought admission to VIT Both are majors

Updated At : 05:57 AM Dec 19, 2016 IST

Please advise me on following queries:

My two grandsons have sought admission to VIT. Both are majors. I want to gift Rs 2 lakh to each of them. Kindly advise some suitable method to avoid the harassment to either of the party by the Income Tax Department.

My close friend has left us for good. He has two joint FD accounts operated by E/s, are along with his wife and the other with daughter. Kindly advise about the income of the survivor. Will it be total amount of FD or interest earned on it?

— Harbinder Singh

Your queries are replied hereunder:-

You can gift Rs 2 lakh each to your grandsons. Please ensure that the gift is made by an account-payee cheque and deposited in the bank accounts of the grandsons. A gift in favour of your grandsons can be made by a letter on your letter head. The letter should clearly specify the cheque No., the name of the bank on which it is drawn and the amount of gift, your complete address and Permanent Account Number. The gift so made should be accepted by your grandsons by a separate letter by each one of them. Such letter should acknowledge the gift, accept the same as also indicate the complete address and their Permanent Account Numbers.

The amount of interest earned on the fixed deposit which was made by your friend who is no more will be taxable in the hands of the legal heirs equally. The amount of interest earned on both the fixed deposits will be aggregated and share of the each legal heir would be included in the income of each one of them according to the share allocable to them in accordance to the provisions of the Hindu Succession Act, 1956.

Please clarify whether payment schedule and percentage has been changed for deposit of advance tax from this financial year. It was earlier 30% before September 15 and 30% before December 15 and 40% before March 15 of the financial year. Whether our government has DTAA with Denmark?

— Sham Lal Mittal

The schedule of payment of advance tax was changed wef June 1, 2016 as under in respect of all assesses except senior citizens who are not liable to pay advance tax:

Yes, the government has entered into a Double Taxation Avoidance Agreement with Denmark.

Please clarify on the following two points:

In ITR-I — Individual income tax return assessment year 2016-17

Item D21 — Details of all bank accounts in India during the previous year (excluding dormant accounts)

What is a dormant account?

I am a retired person. My date of birth is 18.11.1937. Please advise as to from which assessment year I shall be considered a senior citizen (80 years and above) for the purpose of exemption up to Rs 5,00,000 in my total income.

— Raj Kumar

Your queries are replied hereunder:

A dormant bank account for the purpose of the income-tax return (ITR-1) means an account which has not been operated for the past three years.
You will attain the age of 80 years on 17th November, 2017 and would therefore be eligible for a higher exemption of Rs 5 lakh for the financial year ending on March 31, 2018.