Clubbing of income tax

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 July 2014 Dear Sir,
I am a retired CG employee, on superannuation I retired on 30.4.2013. I have received an amount of Rs.25 lac (approx)including 13 lac GPF amount as my retirement benefits. Since having shortage in self confidence, to prevent any misuse of the money and also smooth maintaining of our family needs (which is not at all possible with my only pension amount). I have given 70% fund to my wife by A/c payee cheque as Interest free loan with certain conditions and in this regard an agreement (with notarial affidavit) was made with my wife. Pertinently it may be mentioned that my wife is a PAN holder and she has invested the money in bank FD in her own account and I am 2nd applicant. Now my questions to your good self 1) Whether the income earned over the FD is there any clubbing provision with my income? 2) Whether she has to file separate Return for her income on that mentioned FD even if the income is not within any Tax bracket? 3) If I have no objection can she transfer the loan amount taken from me to her major son who has no fixed income at present ? An early reply over the queries is highly appreciated. Thanks. Bimal Kanti Dutta

CA Mohit Bansal

CA Mohit Bansal (Expert)
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06 July 2014 Sh. Bimalji,
Indian Income tax laws has made sure that no person transfers its income to their relative to save (evade) tax. Keeping in views u/s 64 following are the answers of your queries:
1. Yes. The FD interest income would be clubbed in your income and disclosed in your return as you have transferred money (Loan) without any consideration to your wife
2. She has to file separate return only if Bank has deducted TDS on interest earned, to claim refund as the tax on that income would be payable by you.
3. She can transfer it to your major son but tax implication would be same as above i.e. it would get clubbed in your income
(In case of any further clarification, you may email me at: bmohit02@gmail.com

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