Loan to wife/gift which she invests in shares

This query is : Resolved

sanjb (Querist)
Follow

14 March 2020 Dear Sir,

My wife has no income source as of now. She wants to do do share trading and earn money. I need advice on how should I go about it. With my limited knowledge, I can think of two options. Pl suggest if there is a better way to do it.

Option 1:
I gift her INR 1 lakh. She trades in shares, mutual funds etc. and makes profit/loss.
1. The profit or loss she makes will be added to my taxable income and I will be taxed for that. Is it correct?
2. If she reinvests the profits made and again makes profit/loss on that, it is completely her income and will not be clubbed with my taxable income? is it correct.
3. Any specific documents to be maintained for tax purposes?

Option 2:
I give a loan of INR 1 lakh to her. She trades in shares, mutual funds etc. and makes profit/loss.
1. What will be a reasonable rate of interest and tenure?
2. The profit or loss she makes will NOT be added to my taxable income. However, the interest I receive from the repayment of loan will be added to my taxable income. Is it correct?
3. Any specific documents to be maintained for tax purposes?

Common:
1. We have a joint account which is connected to her share trading site. Is it ok?

regards,
Sanjib

CA M.Rajni Parthasarthy-Nov19

CA M.Rajni Parthasarthy-Nov19 (Expert)
Follow

15 March 2020 Check the Income Clubbing Provisions of Income Tax

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now