Save Rs 499. Go Ad-Free with CAclubindia Pro for 2 Full Years. Subscribe Now!

Amount given to wife (Gift & Clubbing of Income provision)

Tax planning 1015 views 1 replies

Basant

Service

24 Points Posted on 14 July 2011

I have given1 lac to my wife in the current financial year. This amount i do not want to get back from her .She has invested40 K in equity market & Rest amount as Fixed Deposits.

Now my queries are as under:

1. Whether can i treat the amount as gift given to my wife & what will be treatment in her hand?

2. If the amount can be treated as gift, what is the process/formalities & paper work needs to be done for the same?

3. My wife's income is below the threshold limit of income tax. What will be the treatment of Fixed deposit's Interest & Capital Gain (Short Term & Long Term) - whether it will be clubbed with my income & with her income for income tax computation

4. What will be the implication under proposed Direct Tax code for this transaction.

Kindly reply & also suggest and provide some guidance for future tax planning in this regard.

Regards

Basant

Replies (1)

CS Bijoy

Expert

6394 Points Posted on 18 July 2011

You can be treated it as gift but the income derived from that amount will be clubed with your income with the principal amount., because as per IT act anything given without any consideration will be clubbed in the hand of the giftor.