Opinion Of Eminent Legal Luminaries On Controversial Issues

Whether Jewellery And Ornaments Gifted To Minors Through Bombay Trust Liable For WT In The Hands Of Sellers?

QUERY: One of my clients created Family benefit trust for benefit of minors children (Determined with specific share) setting the jewellery and ornaments worth more than 2 crores to be handed over to them / their wives / meet education and marriage expenses till the date of marriage or 18 year’s of age.

To my opinion the income, if any shall be taxable as individual in the hands of each beneficiaries through trustee having taxable income at the slab rate applicable under section 161. Trust as such is not taxable nor income to be clubbed with parents under section 64 of the Act.

What will be the wealth tax liability. In wealth tax whether the trust as individual is taxable as whole on total wealth of the trust fund (If individual includes Trust) or like income tax each beneficiaries having taxable wealth of Rs. 15,00,000/- of more will be taxable through trustee.
ANSWER: The income would be clubbed in the hands of parents under section 64(1A) of the Act, if it accrues or arises during the minority. Similar, the wealth also would be included in the hands of parent till the minority.
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