I have purchased a flat for ₹12 lakh in Belgaum, in my son’s name. He has not started earning, as yet. I paid for it from my retirement funds received in August 2017. Please let me know whether my son has any tax liability.

Can I show this as gift to my son? If yes, what is the procedure?

K P Ramakrishna

I understand that you have purchased the flat in your son’s name during FY 2017-18. As per provisions of the Income Tax Act, 1961, any immovable property received by an individual from any person shall be taxed as ‘Income from Other Sources’ in the following scenarios: in case property is received without any consideration and the stamp duty value exceeds ₹50,000; and in case property is received for a consideration, which is less than stamp duty value and the difference is more than ₹50,000.

However, an exception is provided in a case where the said property is received from a relative, which includes the father of recipient. Accordingly, gift to your son shall not attract income tax implications. However, any income generated from this property shall be taxable.

The Act does not prescribe any procedure for gifting any property. It is advisable to keep documentary proofs (say, a gift deed) so that your son can explain and substantiate the source for acquisition of the said property by him.

In July 2017, we took an educational loan, from SBI, for my daughter’s higher studies in the US. The borrowers are my daughter and my husband and I am the guarantor. We have been paying monthly interest since September 2017 during the moratorium period. Interest is paid from the joint account maintained by my husband and me.

I learn that interest paid on education loan is allowed as a deduction from the total income under section 80E. Can I, as the guarantor of the loan, claim deduction from the total income u/s 80E as my husband has lost his job and thus is not going to claim the deduction?

Brinda Visakan

As per the provisions of the Income Tax Act, 1961, deduction under section 80E is available to an individual upon payment of interest on education loan taken by the individual for the purpose of higher education for self or relatives (which includes children of individual who has taken loan). For the purpose of this query, I presume that the loan has been taken from an approved institution for higher education (as provided under section 80E of the Act). As the deduction is available to the individual who has taken the loan and makes payments, you may not be eligible to claim deduction in the capacity of guarantor.

The writer is a practising Chartered Accountant. Send your queries to taxtalk@thehindu.co.in

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