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Mihir Tanna  |1062 Answers  |Ask -

Tax Expert - Answered on May 08, 2023

Mihir Ashok Tanna, who works with a well-known chartered accountancy firm in Mumbai, has more than 15 years of experience in direct taxation.
He handles various kinds of matters related to direct tax such as PAN/ TAN application; compliance including ITR, TDS return filing; issuance/ filing of statutory forms like Form 15CB, Form 61A, etc; application u/s 10(46); application for condonation of delay; application for lower/ nil TDS certificate; transfer pricing and study report; advisory/ opinion on direct tax matters; handling various income-tax notices; compounding application on show cause for TDS default; verification of books for TDS/ TCS/ equalisation levy compliance; application for pending income-tax demand and refund; charitable trust taxation and compliance; income-tax scrutiny and CIT(A) for all types of taxpayers including individuals, firms, LLPs, corporates, trusts, non-resident individuals and companies.
He regularly represents clients before the income tax authorities including the commissioner of income tax (appeal).... more
Neeraj Question by Neeraj on Apr 28, 2023Hindi
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Sir, I am neeraj working in pvt. company. Can I open a senior citizen saving scheme account ( for entire amount of Rs. 30L from my savings ) in my parents name and gift them the SCSS instrument ? what will be the tax liability on me of the entire amount ? What will be tax liability of that gift on my paranets? Will there any tax liability of interest of SCSS on me ?

Ans: Son can give gift to parents and there will not be any tax implications on gift transactions as same is not considered as income. Parents will pay tax on interest income earned.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Asked by Anonymous - Jun 17, 2024Hindi
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I want to give 30 lakh to my parents for them to open senior citizen savings scheme. The interest will be used for their monthly expenses. How to deal with the tax for this? I want to avoid paying tax on this.
Ans: When you give money to your parents, it's considered a gift. In India, gifts given to specified relatives (including parents) are not taxable in the hands of either the giver or the receiver. However, the interest income earned from the investment in the Senior Citizen Savings Scheme (SCSS) will be taxable in the hands of your parents.

Here's a detailed breakdown of how to handle the tax implications:

1. Gifting the Money:

No Tax on Gift: Suppose, if you give Rs 30 lakh to your parents, this amount is not taxable as it falls under the exempted category of gifts to specified relatives under Section 56(2)(x) of the Income Tax Act.

2. Investing in SCSS:

Senior Citizen Savings Scheme (SCSS): Your parents can invest the gifted money in the SCSS, which is designed for senior citizens and offers attractive interest rates.

• Interest Income: The interest earned on the SCSS investment will be taxable in the hands of your parents. The current interest rate on SCSS is around 7.4% per annum (this rate may vary, so check the latest rate at the time of investment).

3. Tax Implications for Parents:

• Interest Income Taxation: The interest income earned from SCSS will be added to your parents' total income and taxed according to their applicable income tax slabs.
• Section 80TTB Deduction: Senior citizens can claim a deduction of up to Rs 50,000 on interest income from deposits (including SCSS) under Section 80TTB.

4. Tax-Saving Tips:

• Splitting the Investment: If both parents are eligible senior citizens, you can split the Rs 30 lakh equally between them. Each parent can invest Rs 15 lakh in their respective SCSS accounts, potentially reducing the taxable interest income for each.
• Other Deductions: Ensure your parents claim all other eligible deductions under the Income Tax Act, such as medical expenses (Section 80D) and standard deductions.

Example Calculation:

• Investment: Rs 30 lakh (Rs 15 lakh in each parent's SCSS account).
• Annual Interest: Suppose the interest rate is 7.4%, the annual interest income will be Rs 2,22,000 (Rs 1,11,000 per parent).
• Taxable Income: After claiming the Rs 50,000 deduction under Section 80TTB, the taxable interest income for each parent will be Rs 61,000.
• Tax Payable: If your parents' total income, including this interest, is within the basic exemption limit (which is Rs 3 lakh for senior citizens and Rs 5 lakh for super senior citizens), they may not have to pay any tax. If their total income exceeds these limits, the interest income will be taxed according to their applicable tax slabs.

Conclusion:

By giving the money as a gift to your parents and having them invest in the SCSS, you avoid paying tax on the gift itself. However, the interest earned from the SCSS will be taxable in their hands. Splitting the investment between both parents and utilizing available deductions can help minimise the tax burden.

..Read more

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Mutual Funds, Financial Planning Expert - Answered on Jun 25, 2025

Asked by Anonymous - Jun 25, 2025Hindi
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My age is 27, would be 28 in october. My current salary is 98k per month including shift allowance. I am married and stay in a rented apartment with rent 12000rs per month. My wife earns 20k per month(15-16k due to leaves and bad company policies).No kids and not planning for atleast 4-5 years. I have started investing 10k in sip(7 sips..large cap, mid cap, small cap, multicap, elss funds). I work from home and don't have a habit of travelling much. Monthly home spend is around 10k(I like to keep cost as low as possible since I like to save money. I look for deals where ever possible which helps to save alot of money). I spend 10k home every month and have a 27k medical insurance for my parents. Can you give me a good investment plan since I have no idea where to invest and have a good future. I still haven't bought a flat since my h1b is in process and I would purchase once I'm back to India. I have 11L(12L this month end) in savings account
Ans: You are already showing great discipline by saving and investing regularly. Let us build a solid 360° financial roadmap for your future, considering your age, income, goals, and priorities.

Income, Expenses & Savings Snapshot
Age: 27 (turning 28 in October)

Your salary: Rs. 98k/month (includes shift allowance)

Your wife’s income: Rs. 15–16k/month (based on work situation)

Combined monthly income: approximately Rs. 1.13 lakh

Rent: Rs. 12k/month

Household expenses: Rs. 10k/month

Parents’ medical insurance: Rs. 27k/year

Total fixed monthly expenses ~ Rs. 22k excluding rent

You have savings: Rs. 11–12 lakh in savings account

Current SIP investments: 7 funds across large, mid, small, multicap, ELSS totaling Rs. 10k/month

Step 1: Establish Emergency Fund
You have Rs. 11–12 lakh in savings.

Allocate Rs. 3.5–4 lakh as emergency buffer (~3–4 months of expenses).

Keep it in a liquid debt mutual fund via a regular plan.

This ensures safety, liquidity, and better returns than bank savings.

Place the remaining savings into your financial goals (explained later).

Step 2: Build Core Investment Goals
A. Retirement Planning
You’re young with 30+ years ahead.

Retirement corpus needs long-term growth.

Start a Rs. 5k monthly Sip in actively managed, diversified equity fund.

Avoid index funds – they passively follow markets and don’t adjust allocation.

Choose regular plans via an MFD with CFP, not direct plans.

This gives guidance, rebalancing, and emotional discipline.

B. Children Planning (from 2026 onward)
No urgency until 4–5 years later.

Plan for education fund building around 2026.

From 2026, invest Rs. 5k–10k/month in a child-focused mutual fund.

Use balanced or hybrid funds that offer some debt buffer.

Regular plan guidance ensures timely review.

C. Home Purchase Fund (Post H1B)
You plan to buy a flat after return to India.

Set aside Rs. 5–6 lakh from savings as preliminary down payment fund.

Park this in a low-risk debt fund (short-term or low-duration) via regular plan.

Add Rs. 5k/month to this fund after emergency buffer is built.

D. Wealth Accumulation
You hold multiple SIPs (seven funds) of Rs. 10k/month.

Continue them if they meet your risk-return needs.

But consider consolidating overlapping fund strategies.

Consolidation reduces complexity and improves tracking.

Step 3: Optimize & Consolidate Portfolio
A. Review Current SIP Funds
Large-cap, mid-cap, small-cap, multi-cap, ELSS: diversity is good.

But seven funds may cause overlap.

Identify the core top 3 equity funds that give broad market coverage and strong performance.

Continue those as your core.

Use other thematic or smaller funds as satellites, not primary.

B. Reduce Overlap
Overlap happens when multiple funds share similar holdings.

Ask your CFP or MFD to run overlap analysis.

Consolidate overlapping funds into stronger, well-performing funds.

This reduces churn and enhances tracking.

C. Retain Thematic ETFs (via mutual funds)
Global themes (if you hold any) can add value but keep them small (5–10% of equity).

Your focus should be on broad Indian equity first.

Any diversification to global equity should be via actively managed mutual funds, not ETFs or index funds.

Step 4: Cash Deployment of Savings
You have Rs. 11–12 lakh idle. Here’s how to deploy:

Emergency fund: Rs. 3.5–4 lakh in liquid mutual funds

Child planning: Rs. 5–6 lakh parked in low-duration debt fund

Retirement: Top up with Rs. 1 lakh from savings into retirement equity SIP

Home fund: Top up initiative with Rs. 1 lakh in short-term debt fund

This ensures structured use of savings aligned with financial goals.

Step 5: Monthly Cash Flow & SIP Strategy
Let’s plan monthly investments strategically:

Continue current Rs. 10k SIPs

Add retirement SIP of Rs. 5k actively managed equity fund

Add child fund SIP Rs. 5k (starts 2026)

Add home fund SIP Rs. 5k in debt fund

Total monthly SIP after this deployment: Rs. 25k new + Rs. 10k existing = Rs. 35k

Keep surplus for lifestyle, investments, or bonuses.

Step 6: Insurance Intake & Protection Needs
Life insurance:

At your age, with combined income ~ Rs. 13–14 lakh/year, you need a pure term cover sum assured of Rs. 1–1.5 crore.

This protects wife and future child in income loss.

Health insurance:

You already have Rs. 27k/year parents cover.

Add personal family floater plan of Rs. 5–10 lakh to cover medical emergencies.

This is crucial before starting family and for long-term protection.

Disability/Accident cover:

You may consider a small premium-term rider for income protection in case of disability.

Optional but useful given shift allowance dependency.

Step 7: Tax Planning
SIPs in equity funds qualify under new mutual fund LTCG tax rule:

Gains above Rs. 1.25 lakh taxed at 12.5%

STCG taxed at 20%

Use ELSS fund for sectional 80C deduction, up to Rs. 1.5 lakh limit

Retirement SIP may qualify for 80C/80CCD (depending on fund type and structure)

Avoid frequent withdrawals to reduce tax.

Keep long-term horizon on equity investments.

Step 8: Risk & Asset Allocation
Given your profile:

Age 27, risk appetite likely high, with long horizon

Asset mix guidance:

Equity: 60–70%

Debt: 20–30%

Liquid/emergency: 10–15%

Your current mix:

Equity via SIPs across categories (good)

Debt via home rent saving fund

You need clear emergency and insurance buffer

This allocation aligns with your age and goals.

Step 9: Review, Rebalance & Monitoring
Meet CFP every 6 months with MFD to review portfolio

Rebalance allocation if equity or debt drifts by ±10%

Watch asset overlap, performance, and goal alignment

Increase SIP amounts gradually with income growth

Example adjustments:

Step up retirement SIP from Rs. 5k to 10k in two years

Add child fund after medical planning begins

After flat purchase, reduce home fund and allocate to retirement

Step 10: Lifestyle, Goals & Flexibility
You keep lifestyle simple and frugal—this is an excellent habit

Focus on saving and investing, not buying assets prematurely

Delay big spending until after H1B return and salary clarity

Stay flexible and responsive to life changes like kids or relocation

360° Financial Roadmap Summary
Build an emergency fund in liquid mutual funds (~Rs. 4 lakh)

Park home down-payment fund in low-risk debt mutual funds (~Rs. 6 lakh)

Launch a retirement-focused equity SIP (Rs. 5k monthly)

Continue and optimize your existing SIPs via consolidation

Add insurance: term life cover Rs. 1–1.5 crore, family floater health cover

Use ELSS under 80C for tax savings

Maintain your frugal lifestyle and high savings discipline

Rebalance and review every 6 months via CFP guidance

Step?up SIPs with bonus or salary increment

Prepare for child-related expenses from year 2026 onward

Final Insights
Your saving discipline at age 27 is impressive

You have a strong head-start

Now build emergency security, retirement growth, and insurance cover

Consolidate investments to reduce clutter and enhance clarity

Use actively managed funds through a CFP-guided MFD

Avoid index and direct funds for long?term funds

Plan for child's future and home purchase mindfully

Stay focused on goals and flexible with life changes

You are laying a strong foundation for future financial strength and flexibility. With consistent execution, periodic reviews, and strategic adjustments, you are likely to meet your long?term goals calmly and confidently.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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