Urgent query
This query is : Resolved
17 December 2012
if an individual retired govt employee invest his gratuity income as FDR in the name of his spouse then the interest from such FDR will be taxable in the hands of spouse or ind himself ??
17 December 2012
In the hands of Individual irrespective of the fact whether the gratuity is exempted or not.[Sec 64(1)(iv)]
17 December 2012
is there any legal way that an ind can transfer an amount to his spouse so that it can invest in the name of spouse only...??
02 August 2025
Here’s a clear explanation for your urgent query on **gratuity investment in spouse’s name and taxability of interest**:
---
### **Issue:**
* An individual (retired govt employee) invests his **gratuity income** as FDR in the **name of spouse**.
* Question: **Who is taxable on the interest income — the individual or the spouse?**
---
### **Relevant Law: Section 64(1)(iv) of Income Tax Act**
* Income arising from **transfer of income without adequate consideration to spouse or minor child** is **included in the transferor’s income**.
* So, even if the FDR is in the **spouse’s name**, if the amount invested originally belongs to the individual, **interest income will be taxable in the hands of the individual**.
---
### **Answer:**
* Interest on FDR from gratuity income invested in spouse’s name will be **taxed in the hands of the individual who transferred the amount**, **not the spouse**.
* This applies **irrespective of whether gratuity was exempt or not**.
---
### **Legal Way to Transfer Money to Spouse for Investment:**
* **Gifting:** The individual can gift money to spouse.
* Gift is not taxable in the hands of spouse.
* However, under Section 64(1)(iv), any income from the gift (like interest) will still be taxable in the hands of the individual if the gift is without adequate consideration.
---
### **How to make income taxable in spouse’s hands legitimately?**
* The **spouse should have independent sources of funds**.
* Transfer should be by way of **genuine sale or transfer for adequate consideration**.
* Or, spouse should earn income independently.
---
### **Summary:**
| Scenario | Taxability of Interest Income |
| ------------------------------------------------------------------- | ------------------------------------------ |
| FDR invested by individual in spouse’s name (without consideration) | Taxable in individual’s hands (transferor) |
| FDR invested by spouse with spouse’s own funds | Taxable in spouse’s hands |
| Genuine transfer with adequate consideration | Taxable in spouse’s hands |
---
If you want, I can help draft a detailed note or provide case laws supporting this. Let me know!
---
### **Issue:**
* An individual (retired govt employee) invests his **gratuity income** as FDR in the **name of spouse**.
* Question: **Who is taxable on the interest income — the individual or the spouse?**
---
### **Relevant Law: Section 64(1)(iv) of Income Tax Act**
* Income arising from **transfer of income without adequate consideration to spouse or minor child** is **included in the transferor’s income**.
* So, even if the FDR is in the **spouse’s name**, if the amount invested originally belongs to the individual, **interest income will be taxable in the hands of the individual**.
---
### **Answer:**
* Interest on FDR from gratuity income invested in spouse’s name will be **taxed in the hands of the individual who transferred the amount**, **not the spouse**.
* This applies **irrespective of whether gratuity was exempt or not**.
---
### **Legal Way to Transfer Money to Spouse for Investment:**
* **Gifting:** The individual can gift money to spouse.
* Gift is not taxable in the hands of spouse.
* However, under Section 64(1)(iv), any income from the gift (like interest) will still be taxable in the hands of the individual if the gift is without adequate consideration.
---
### **How to make income taxable in spouse’s hands legitimately?**
* The **spouse should have independent sources of funds**.
* Transfer should be by way of **genuine sale or transfer for adequate consideration**.
* Or, spouse should earn income independently.
---
### **Summary:**
| Scenario | Taxability of Interest Income |
| ------------------------------------------------------------------- | ------------------------------------------ |
| FDR invested by individual in spouse’s name (without consideration) | Taxable in individual’s hands (transferor) |
| FDR invested by spouse with spouse’s own funds | Taxable in spouse’s hands |
| Genuine transfer with adequate consideration | Taxable in spouse’s hands |
---
If you want, I can help draft a detailed note or provide case laws supporting this. Let me know!
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Merger issue
- How to add NRE account to income tax profile?
- Salary u/s 194C
- Upload Level Validation Error
- Nill TDS Return FY 2025-26
- Deduction for HUF
- EXEMPTION UNDER SECTION 54 FOR UNDER CONSTRUCTION FLAT
- Sale of foreign shares by Indian resident
- Form 10E requirement for Leave encashment and Gratuity received at retirement
- AY2025-26- Bug in ITR2 Online Filing - TDS Section related to Property Sale
- TAXABILITY OF STATE INSURANCE MATURITY RECEIPTS BY RAJASTHAN GOVERNMENT EMPLOYEE ON RETIREMENT ?
- Document to add trade name
- GST Partners addition
- Non-disclosure of Foreign Shares & Dividend in Past ITRs – How to Rectify & Report Now?
- ICWAI-Final best coaching center for online by English
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Refund_ Insufficient in credit ledger
- EPF Withdrawal Where to show in ITR2
- 54 F disallowance presentation in ITR 2
- TDS on disallowance and reporting
Trending Online Classes
-
Input Tax Credit, GST refunds and Recovery of refunds- Roadblocks and way outs
CA Nipun Arora03 September 2025 -
GST LIVE Certification Course - 43rd Weekdays Batch(With Govt Certificate)
Industry Expert15 September 2025
CAclubindia
