Rental Income On Flat Gifted To Daughter Will Be Clubbed With Recipient’s Income Except Where Clubbing Provisions Apply

There is no tax liability for the person giving the gift. However, the recipient of the gift has to include the value of the same in his/her income under certain circumstances. Gifts received from all the sources are fully exempt in the hands of the recipient if the aggregate value of all the gifts does not exceed Rs 50,000 in a year. Once the value of all the gifts exceeds this threshold, the full value of all the gifts become taxable in the hands of the recipient without any basic exemption. However, gifts received from certain specified relatives, including parents, are fully exempt without any limit. So, there is no tax liability either on the father or the daughter at the time of gifting the flat.

Generally, any income which is earned or arises on a gifted asset becomes taxable in the hands of the recipient if the recipient is a major, except in certain circumstances where provisions of clubbing of income apply. In case the daughter is a minor, the provisions of clubbing of income will apply and all income, including the rent received, which arises to the minor daughter, shall be clubbed with the income of the parent who has a higher income. There is, however, an exemption of Rs. 1,500 available on the income which is to be clubbed with the income of the parent. The capital gains will also become taxable in the hands of the daughter if she is major, else it will be clubbed with the parent’s income.

Opening a PPF account is governed by the PPF Scheme 2019, whereas the deduction for contribution towards PPF is regulated by provisions of the Income-tax Act, 1961.

Under the PPF Scheme 2019, only an individual who is resident of India, can open a PPF account for tax purpose, and therefore, an HUF cannot open a PPF account under the PPF Scheme, 2019.

However, as far as making contribution and availing of the tax benefits by the HUF are concerned, the same are regulated by the Income-tax Act, 1961. There is nothing in the income tax laws prohibiting an HUF from claiming deduction under Section 80C of the Income-tax Act, 1961 for contribution made by it to the PPF account of any of the members, including the karta of the HUF.

Typically, lenders issue a single certificate for payment of interest and repayment of principal amount of a joint home loan, mentioning the names of all the co-borrowers, as the bank would not know the respective shares of the co borrowers in the home loan.

Even if the bank issues a single certificate for a joint home loan, the respective co-borrowers can claim the tax benefits in their respective ratio in the home loan, provided one is also a co-owner of the property.

Moreover, the bank will register the ECS for a joint home loan even if there are more than one joint borrowers of the home loan. So, as borrowers, you have two options. Either you open a joint bank account just for servicing the home loan and transfer your respective share in the home loan every month. Alternatively, one borrower can pay the EMIs from his bank account and the other co-borrower can transfer the respective share in the EMIs to that bank account.

Since you will transfer your share in the bank account of your brother, you will be able to claim the tax benefits associated with the home loan without any problem.