Taxation of Gifts & Arrears

1. Children's future I have two children, aged 10 and 12. For the purpose of their higher education and marriage, I wish to keep some amount invested in their name by way of recurring deposits in banks, so that when they grow up they will be able to utilise the money for the above-mentioned purpose. I have been told that there is no gift tax on such transfers now. However, one of my friends told me that any interest received on these deposits shall be taxable in my hands. What should I do to fulfill my objective?

This article was originally published on August 28, 2003.