Taxation: Kuldip Kumar

If my father pays my child's school fees, can he claim tax exemption for it?

Under Section 80C of the Income Tax Act, an individual can claim deduction against payment of tuition fees to any university, college, school or other educational institution in India for the purpose of full-time education of his two children. Since the Act prescribes that the payment is to be made by an individual for his/her children only, the payment of school fees of grandchildren will not be allowed as a deduction in the hands of your father.

I transferred my house to my married daughter. She sold it and bought another flat with that money. Will she be taxed on inheriting the flat or selling it?

There is no inheritance tax levy or gift tax in India. Further, gifts from close relatives are also not taxable in the hands of recipients and accordingly there is no income tax liability on your daughter when you transferred the flat in her name. However, when your daughter sold the flat, any gain arising on the same would be subject to tax. But, the law also allows her to substitute the cost of acquisition of house equal to the value at which you acquired the house. If the total holding period of house, yours and your daughter's, is more than three years , then benefit of indexation can also be availed to compute long term capital gains. If your daughter acquired another flat, than such gains would not be taxable in her hands if she meets the conditions as stipulated in Section 54 of the Income Tax Act, 1961.

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