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Clubbing provisions

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mohammedshafi shaik

60 Points Posted on 05 January 2020

in case husband and wife both are working ,husband give 100000 to wife for personal expenses who will pay the tax on 100000?

husband gift 100000 to wife and she is already working in another company and she invest gift Amt100000 in fd she received interest who will pay tax on interest ant?

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Quick Summary

When a husband gifts money to his wife, the gift itself is usually tax-exempt. However, any income generated from that gift, such as interest from an investment, may be subject to 'clubbing of income' provisions. This means the income generated could be taxed in the hands of the original giver (the husband) rather than the recipient (the wife).

Pawan Vemula

284 Points Posted on 05 January 2020

Gifts from specified relatives are exempted, regardless of amount. These relatives are spouse, father, mother, brother and sister. They also include any lineal ascendant or descendant of the individual or his spouse as well as brother/sister of the spouse. However note that even though the gift itself is exempt in the hands of the recipient, the income generated from the gift may be taxable under the clubbing of income provisions of the Income Tax Act. For example, if Mr A gifts Rs 10 lakh to his wife, the same would not be added to the income of his wife. However if his wife creates an FD from the same and earns interest, the interest would be added to the income of the husband.