My wife is a homemaker and doesn’t have any income. I’m making investments in her name separately, and I also do investments in my own name. Suppose we each have a long-term capital gain (LTCG) of ₹1.25 lakhs in a FY. Can we each claim an LTCG exemption of ₹1.25 lakhs, or do we need to combine our gains (totaling ₹2.5 lakhs) and only claim an exemption of ₹1.25 lakhs?
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Clubbing of LTCG
Replies (4)
Quick Summary
You and your wife can each claim a separate LTCG exemption of ₹1.25 lakhs, since you both have individual investments and gains.
The LTCG exemption limit is applied individually to each taxpayer, regardless of their marital status or combined income.
This means that you and your wife can each claim the exemption, resulting in a total exemption of ₹2.5 lakhs.
To illustrate, suppose you have an LTCG of ₹1.25 lakhs from your investments, and your wife also has an LTCG of ₹1.25 lakhs from her separate investments.
In this case, you can both claim the LTCG exemption individually, resulting in a total exemption of ₹2.5 lakhs.
It's essential to maintain separate records and accounts for your individual investments to take advantage of the separate exemption limits.
You and your wife can each claim a separate LTCG exemption of ₹1.25 lakhs, since you both have individual investments and gains.
The LTCG exemption limit is applied individually to each taxpayer, regardless of their marital status or combined income.
This means that you and your wife can each claim the exemption, resulting in a total exemption of ₹2.5 lakhs.
To illustrate, suppose you have an LTCG of ₹1.25 lakhs from your investments, and your wife also has an LTCG of ₹1.25 lakhs from her separate investments.
In this case, you can both claim the LTCG exemption individually, resulting in a total exemption of ₹2.5 lakhs.
It's essential to maintain separate records and accounts for your individual investments to take advantage of the separate exemption limits.
Thank you Sir. But if my wife's LTCG is 2 Lacks means, then remaining 75,000 need to be clubbed with my income? Is my understanding is right.
Investments from your money in your wife's name are clubbed:
• Sec 64(1)(iv): income from assets transferred by an individual to the spouse without adequate consideration is clubbed with the transferor's income. That includes capital gains on investments made from money you gave her.
• So LTCG and dividends on investments in her name funded by you are taxable in your hands. Report them in your ITR (Schedule SPI). Her ITR need not show them, or shows them as clubbed.
• Investments funded by her own income or gifts from her relatives (not you) are her income.
• Income on the clubbed income (re-invested gains) isn't clubbed further (per many tribunals).
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