Gift Tax query

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This query is : Resolved

Ketan (Querist)
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25 January 2011 There are few queries I have pertaining to Gift tax.
1) Can Husband give GIFT to the wife>>> is it tax free or will it get clubbed if yes then whose Income & For how long will it remain clubbed.
2) Can father in law or mother in law give Gift to Daughter in law?? >>>??>>> it tax free or will it get clubbed if yes then whose Income.
3) ARE THE IMPACT ON TAX IF THE GIFT IS GIVEN ON THE FOLLOWING by Husband or Father inlaw or mother in law.
a. “after marriage”
b. On the Day of marriage
c. Before the day of marriage – “Will there be limit clause Applicable”
4) As written in the act that “INCOME ARISING FROM GIFT ARE TAXED” what does it mean>>> i.e. What is the status if
a. The gift is in form of Jewellery

CMA. Dinesh S Adhikari, ACMA

CMA. Dinesh S Adhikari, ACMA (Expert)
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25 January 2011 Impact of Income tax will be as follow:
1) Gift from spouse is tax free in the hands of receiving person(spouse) u/s 56(vii) but income generated(if any) from that asset will be taxable in the hands of that spouse who gave the gift(u/s 64(iv).

2) Gift received from parents of spouse will be tax free u/s 56(vii), however income generated(if any) from that asset will be taxable in the hands of that spouse who gave the gift(u/s 64(viii).

3)a) After marriage same as above impact.
b) On the occasion of marriage gift is tax free and even income received in future will not be taxable in the hands of that person who gifted but only receiver will be taxable for that income.(u/s 56(vii))

4) This means that if any income received from that gifted asset then this will be taxable in the hands of first party(who gifted) if if falls u/s 61,63,64. If no income arising then no taxability.
a) In case you receive any income from jewellery from renting or by sale this jewellery then that rent amount or sale consideration will be taxable in the hands of first party(as per above sections).

NOTE:- Please go through Section 56(vii) and Clubbing chapter, you will get answers of all your questions.

with warm regards!!!

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