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Disclose account in minor child’s name while filing returns

The income arising to a minor child gets included in the total income of the parents

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I have a savings bank account in my minor daughter’s name that is linked to my salary account. I had also linked a FD to that as it was one of the conditions of opening the account. The FD will mature this year. Will I have to show the FD in my return? Will I have to show the savings bank account separately too?
- Mridula Sasidhar

The income arising to a minor child gets included in the total income of the parents. In your case, both the incomes i.e. maturity proceeds from fixed deposit and interest arising to your daughter will be included in your total income and accordingly, require disclosure in the return of income.

My uncle and aunt had taken a reverse mortgage on their home as they had financial difficulties. After my uncle passed away my aunt wants to transfer the home to my name as I will be supporting her financially. I plan to pay off the loan. Will there be any tax if the home is transferred to my name? And if I repay the mortgage can I claim tax exemption for it?
- Pradeep Gupta

I understand that your aunt is your relative as per the meaning given in the Income tax Act, 1961 which includes lineal ascendants. Given that, the transfer will be considered as a gift from one relative to another and thus, will not be charged to tax. However, no tax benefit shall be available to you for the amount of loan discharged by you.

Till last year I was paying the premium on our family health insurance policy and claiming the tax benefit from my office. This year I quit my job. Now my husband is paying the premium. The receipt is issued in his name, though I am still the first policyholder in the policy. Should we get this changed for my husband to claim the tax benefit? He is also paying a certain amount towards his office group insurance? Can he claim tax benefit for both policies together?
- Preeti Sehgal

The section 80C of the Income Tax Act, 1961 (Act) entitles a person to claim deduction of premium paid on the life insurance policy taken for the protection of self, spouse or children uptill the threshold limit of Rs. 150,000. Therefore, your husband can pay life insurance premium to avail tax benefit and further, no changes shall be required to be made in the life insurance policy. Also, there is no bar on the number of policies that can be taken for claiming benefits of deduction under the Act. Thus, your husband can claim tax benefit of dual payment of premium till it is within the threshold limit of Rs. 150,000. Please note that the threshold limit is not exclusively available for claiming deduction of the premium payment. It is a cumulative threshold which includes other payments such as investment in ELSS, provident fund contribution etc., along with premium payment .

My mother and siblings sold a piece they had inherited from my grandfather. Each of them got about Rs 15 lakh as it was in their joint names. Will they have to pay any tax on it? My mother and her sister are retired, while their younger brother is still working. If my mother gifts me the money will I have to pay any tax on it? I want to use the money to repay my home loan
- Pankaj Goel

The gains arising on the sale of property inherited by your mother and sibling will be taxed as capital gains in their hands. However, you will not be liable to pay any tax on the sums received by you since the gifts received from a relative which includes lineal ascendants is exempt from tax.

I invested in my brother’s garage in our hometown. Can I show business expenses from this business and claim tax benefit ? I have my own civil contract work and regularly file taxes?
- Ravi Mishra

Any expense incurred for running the business not being capital in nature is allowed to be set off from the business income of the tax payer. You may not be able to claim the deduction in your individual capacity since you have not incurred the expense for running of your business. If you are a partner in your brother’s business and have in place a set arrangement, in such a case, the partnership firm will be authorized to claim a deduction of such expense if it is incurred for running the business while computing the income of the partnership firm.

Suraj Nangia, Partner, Nangia Advisors LLP

Send your queries related to personal tax to personalfinance@dnaindia.net

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