Can I Invest in My Mother's Name to Avoid Long-Term Capital Gains Tax?

Ans: No, Long Term Capital Gains (LTCG) earned by an individual cannot be invested in the house construction of their son to save income tax. Under the Income Tax Act, Section 54, an individual can claim an exemption from LTCG tax liability if they invest the sale proceeds in the purchase or construction of a residential house property. However, the exemption is available only if the individual invests the capital gain in their name and not in the name of their son. Additionally, there are other conditions that need to be fulfilled for claiming the exemption.

Ans: Yes, you can invest in mutual funds on behalf of your daughter, even if she is 27 years old, using your income. However, it's essential to understand a few points:

Gift Tax Implications: Transferring funds to your daughter's name may have gift tax implications. In India, any gift received by an individual exceeding Rs. 50,000 in a financial year is taxable under the Income Tax Act. However, gifts from specified relatives, including parents to their children, are exempt from tax.
Legal Ownership: Once the investment is made in your daughter's name, she becomes the legal owner of the funds. While you can manage the investments on her behalf, she will have control over the assets once she comes of age.
Financial Independence: Investing in your daughter's name can be a great way to secure her financial future and promote financial independence. It can also help her start building wealth at a young age.
Investment Strategy: Consider your daughter's financial goals, risk tolerance, and investment horizon when selecting mutual funds. Ensure that the chosen funds align with her objectives and are suitable for her age and financial situation.
Before proceeding, it's advisable to consult with a Certified Financial Planner or tax advisor to understand the tax implications and ensure compliance with relevant regulations. They can provide personalized guidance based on your specific circumstances and goals.

Ans: Unfortunately, she cannot buy new house in your name as capital gains in her name.