Gift tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 December 2014 MY father in law sold his house and gave 5 lakhs from the sales procesd to my wife as gift. Now my wife want to transfer that amount in my name for clearing our loan.

Could you please be kind enough to let me waht would be best way to take this money who should i take that money as GIft or as a loan from my wife? what document do we need to make fro these transaction( from my fIL to my wife and from my wife to me)
What will be tax implication?

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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26 December 2014 1. Gift from father in law will not be taxable in the hands of wife.

2. Even though clubbing provisions apply in case of gift from father in law to your wife since no income will be generated by your wife out of the amount gifted by father in law there will be no clubbing of income in the hands of father in law.

3. Amount gifted to you by your wife will not be taxable in your hands. Also no clubbing will be applicable in your wife's hands on transfer of this money since it will be invested by you only in clearing your loan.

4. Advisable to make two separate gift deeds for both gifts.

Rupesh Jain

Rupesh Jain (Expert)
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26 December 2014 gift is not taxable in your wife hand, for that you make two gift deed one for from father in law to your wife and another from your wife to your hand.

CA Kumar Mukesh

CA Kumar Mukesh (Expert)
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26 December 2014 As per Section 56(2)(vii) of Income Tax Act, 1961 both transaction comes under the definition relatives, transaction between the relative have no Income Tax Implication at all under the same section.

Therefore, no Tax treatment is required. It upto you how you would like like treat.

Further, Said section doesn't specify any kind of documentation for transaction between relatives. But holding Gift deed for transaction with father in law is suggested.

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