Arjuna (Fictional Character): Krishna, Valentine's Day (14th February) is the perfect time to express your love in the most extraordinary way. While expressing love and affection to our beloved ones we carry out certain transaction of give and take, are they taxable?
Krishna (Fictional Character): Arjuna, Love is the root of all the things we do in our day to day life. The base of all the relationships like Husband-wife, Parents, children, friend circle and youth is 'Love'. In today's world it is rare to find True Love. Monetary Transactions carried out of Love and Affection may be taxable. Further certain transactions (out of love and affection) with specified persons are only Tax free.
Arjuna: Krishna, Oh Great! So let us relate the journey of love in various stages of life with income tax provisions. The first stage is exchange of gifts or money in courtship period (before marriage) between the two, are they taxable?
Krishna: Courtship period is the golden period for the fiance. However as per income tax and other laws they will be considered as husband and wife only after marriage. Therefore Gifts given above Rs. 50,000 before marriage will be taxable in the hands receiver.
Arjuna: Lord Krishna, after the golden period comes the second stage i.e. marriage. In this couple receives gifts and money, what about its taxation?
Krishna: Arjuna, marriage is coming together of two people and their families. There is happiness all around and love journey of the couple starts from this stage. On the occasion of marriage all gifts received from anyone of any value are tax free. But the list of gifts received with details should be maintained. Further expenses of marriage, honeymoon tour, etc. should be properly recorded. The couple should keep the ornaments received to the wife properly. As wife is very affectionate for the things received from her family at the time of marriage. If husband and wife make financial planning from the start then financial obstacle will not arrive in their relationship and life will become easier. Husband and wife should make investments in joint names. Further as per clubbing provisions of Income Tax Act, income derived from money gifted by one to other will be treated as the income of the giver. If husband and wife are doing job or they have their own business then different rules of income tax will be applicable to them and they both will have to file separate income tax returns.
Arjuna: In life after having children, how couple should take care of the financial transactions?
Krishna: The real love, family life starts after having children. Husband and wife after paying their own income tax should prepare their investments, deposits and portfolio. Further the couple should make planning of children's education expenses, home loan EMI, life insurance premium, medical insurance premium and investment in public provident fund, etc. in such a way that income tax exemption will be taken and it will also help children in the future. As per Income tax act deduction of tuition fees and educational loan is available. Husband and wife can take the deduction if these expenses are spent from their own earnings. Further gift given by father and mother to their children is tax free.
Arjuna: How husband and wife should make arrangement for old age?
Krishna: Listen Arjuna, In the old age husband and wife should look after their health and financial earnings. In the old age, no one feels good to ask for money. Therefore by saving money plot, house should be purchased in the joint names. The benefit of senior citizens is available after the 60 years of age. In the budget 2018, the benefits are increased. The deduction of Interest on savings in the bank and posts is increased upto Rs. 50000. Similarly, the deduction of medical expenses of specified diseases is increased upto Rs. 100000.
Arjuna: In life we have love relationship after husband and wife with the friends, relatives. What about the transactions carried out with them?
Krishna: In income tax the definition of relatives is given, however the definition of friend is not given. Tax is not levied on the gifts received from the specified relatives. Further the transaction of accessorial properties should be carefully done according to law. In the relation of friends money should not come. If transactions are incurred with the friends as per income tax act they will be taxable. It means if hand loan or advance given to friend the financial point of view interest income should be shown. Otherwise it may create problem as per income tax. If gift of more than Rs. 50,000/- received from friend then it will be taxable.
Arjuna: On the occasion of valentine day how one should keep relation of love and money?
Krishna: On the occasion of valentine day as a symbol of love one must give gift to his /her beloved ones. There is huge difference between Love on money and money for love. It is not wrong to earn money but only love on money is wrong. Love is tax free but it is not true for the one who love for money.
Tags Income Tax