Tax on PF, Gratuity amount transferred to wife on retirement
This query is : Open
05 March 2009
I wish to transfer a lump sum amount received by virtue of my PF and gratuity on my retirement to my wife. So I wish to know, is the amount transferred from my pf and gratuity to my wife on retirement taxable? If so under which provision? Is it true that the PF and gratuity is not taxable in my hands on retirement? Is it wise to distribute the amount received during retirement among the spouse and son for tax exemptions?
CA Nitin Wadhwani
(Expert)
05 March 2009
The amount received on account of PF and Gratutity are exempt upto the limits specified u/s 10(10A) and 10(10) respectively.
Gift to your wife and minor child will not be taxable since they fall under the definition of relative u/s 2(41).
However, income earned out of such income will be clubbed in your income and you will have to cough up tax on such income subject to exemption of 1500/- in case of clubbing of income of minor u/s 10(32).
If you want to give the amount to your wife or child, give it as a interest free loan.
Gift to your wife and minor child will not be taxable since they fall under the definition of relative u/s 2(41).
However, income earned out of such income will be clubbed in your income and you will have to cough up tax on such income subject to exemption of 1500/- in case of clubbing of income of minor u/s 10(32).
If you want to give the amount to your wife or child, give it as a interest free loan.
05 March 2009
If from the amount received on account of PF and Gratuity on retirement, I transfer some money to my wife will it be taxable? If no will it be different from gifting money to wife for which a ceiling of Rs 50,000 is there as tax exemption? Can I save tax by transferring the tax exempted money to my wife? If so under what provision? How to transfer money for the purpose of interest free loan to wife and what safeguards to be adopted?
05 March 2009
If from the amount received on account of PF and Gratuity on retirement, I transfer some money to my wife will it be taxable? If no will it be different from gifting money to wife for which a ceiling of Rs 50,000 is there as tax exemption? Can I save tax by transferring the tax exempted money to my wife? If so under what provision? How to transfer money for the purpose of interest free loan to wife and what safeguards to be adopted?
K V Subba Rao
(Expert)
06 March 2009
Sri Nitin Wadhwani has already explained the statutory provisions. If you have not followed, better contact a local CA
Apart from tax point, it is definitely not advisable to "gift" away WHOLE of PF and Gratuity to any one including spouse
Apart from tax point, it is definitely not advisable to "gift" away WHOLE of PF and Gratuity to any one including spouse
06 March 2009
How is transfer of interest free loan to spouse done? What are the formalities to be executed for the proper implementation of the interest free loan?
SANDEEP AGGARWAL
(Expert)
07 March 2009
It is better for you to create your HUF And gift to HUF instead of gifting to wife or you can gift to your children also.
regards,
Sandeep Aggarwal
regards,
Sandeep Aggarwal
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