I am thinking of giving interest-free loan to my mother so that she can put it in fixed deposit in her name. There are two reasons why I would want to do this.
1 - My mother will get better interest rate as she is senior citizen.
2 - She will be in lower tax bracket and may have to pay lesser or no tax.
I want to know if I am allowed to do this. If I am allowed to make this kind of an arrangement, how should I document the interest-free loan? Is there any upper limit on the amount of loan or the term of the loan?
Some points that may be relevant:
a) My parents live with me in the house owned by me.
b) My mother has rental income through properties owned by her. But, she is not a tax payer as the income is less.
c) My father has business income. He is also not a tax payer as the income is less.
