Query on clubbing of income
This query is : Resolved
25 December 2023
As I understand, If I gift some money, e.g. Rs 1,00,000 to my major son, any income generated on this money will be taxed in the hands of my son.
As my son has his other sources of income, namely, salary and income from investments, he might gift some money e.g. Rs 50,000 to his mother, i.e. my wife.
My question is whether these two transactions together might be seen as indirect gift from me to my wife and will these attract the clubbing of income provisions?
Are there any suggestions on how to safely carry out such gifting transactions so that we are not inadvertently violating any income tax rules.
As my son has his other sources of income, namely, salary and income from investments, he might gift some money e.g. Rs 50,000 to his mother, i.e. my wife.
My question is whether these two transactions together might be seen as indirect gift from me to my wife and will these attract the clubbing of income provisions?
Are there any suggestions on how to safely carry out such gifting transactions so that we are not inadvertently violating any income tax rules.
25 December 2023
Yes.
The clubbing provisions will apply for indirect transfers or cross transfers as well.
The clubbing provisions will apply for indirect transfers or cross transfers as well.
25 December 2023
Dear Sir, thanks a lot for your prompt response. I need a few further clarifications.
Under what conditions do such transfers count as indirect transfers or cross transfers for which clubbing provisions would apply? Is there a time window, like within a financial year?
E.g. I may have sent money multiple times to my major son during his higher studies when he did not have his own income. Now that he is earning, he might wish to gift money to his mother.
What are the rules regarding such transfers?
Under what conditions do such transfers count as indirect transfers or cross transfers for which clubbing provisions would apply? Is there a time window, like within a financial year?
E.g. I may have sent money multiple times to my major son during his higher studies when he did not have his own income. Now that he is earning, he might wish to gift money to his mother.
What are the rules regarding such transfers?
25 December 2023
In such a case given above clubbing provisions not applicable.
Cross transfer within short period of time attract clubbing provisions.
Cross transfer within short period of time attract clubbing provisions.
25 December 2023
Ok sir. I got the point.
Is it possible to define "within short period of time" for a lay person?
Or is it subjective or dependent on the assessing officer?
Thanks
Is it possible to define "within short period of time" for a lay person?
Or is it subjective or dependent on the assessing officer?
Thanks
25 December 2023
It's depends on the AO.
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