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Investing money in wife and mother name, what are the limits

Sachin (None) (55 Points)

08 March 2017

Hi All,

I am a salaried individual. My wife and mother are both housewife. My income attracts 30% of tax. I have some surplus funds which i want to invest in my mother and wife name, below are few of the questions i have.

- Can i transfer the funds to my mother and wife account and then invest those further? Is it okay as per Income Tax.

- Do I and my mother and wife need to show in any of their income tax return that the money is received from me? If yes, where and how?

- The profit eraned on that investment which my mother and wife will make, we will pay applicable taxes. Would that have any othe additional implications?

Please help me with these confusion points.

Thanks in advance.

Thanks

Sachin

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8 Replies

(Guest)

u can give gift to your mother and wife

there is no tax on gift but interet received

from gift investmet will be taxable and u also go through

sections for clubbing income

1 Like

Sachin (None) (55 Points)
Replied 08 March 2017

Hi Samir,

Thanks for your response. I am not very clear from your responses. When i give gift do i need to show it in my ITR? Do my mother and wife need to show in their ITR? Also what do you mean by clubbing sections? Can you please elaborate on same.

(Guest)

YES U AND THEY ALSO SHOW IN THEIR ITR

AND IF YOU INVEST IN THEIR NAME

INTEREST WILL BE ADD UP IN YOUR INCOME (CLUBBING PROVISION WILL APPLY)

1 Like

Sachin (None) (55 Points)
Replied 09 March 2017

Hi Samir,

Sorry for repeating same thing. But I am not very technical to understand the answer you had provided. If you dont mind can you please provide me bit more detailed answer. As well if there are any reference links i can read do let me know i can read and gain some more understanding.

-Sachin

Saksham Agrawal (20 Points)
Replied 13 March 2017

Sachin, first of all, gifting assets to relatives does not attract income tax (sec. 56). Also the same need not be shown in any of the ITR(s) as you enquired above. Secondly, and importantly, gifting asset to (sec. 64) spouse i.e. wife in your case, have some implications as Samir indicated above, which is that the income (that she earns from these investments in her name) shall be added to your income and therefore you shall be liable to pay tax on it @ 30% rate, as you indicated above (as you already belong to the 30% slab). Also, to clarify, that in case of assets transfered to mother, no such implications shall be there i.e. income will be taxed in her hands only. Hope this would have given some more clarity.☺

1 Like

Sachin (None) (55 Points)
Replied 14 March 2017

Hi Saksham, Very detailed and explainatory answer. This solves my questions and gives me directions to proceed.

1 Like

saroj (Trainee) (29 Points)
Replied 05 April 2018

Hi, I have a similar question. I am a salaried employee and I am making deposits in my mother's name. My mother is a house wife. Whether Interest earned on that deposits will be taxable in my hands?

Saifullah Khalid (Autodidact/Curious ) (633 Points)
Replied 05 April 2018

Originally posted by : saroj
	Hi, I have a similar question. I am a salaried employee and I am making deposits in my mother's name. My mother is a house wife. Whether Interest earned on that deposits will be taxable in my hands?

No , no clubbing provision applicable on income generated out of money gifted by a son to his mother .....interest earned will be taxable in her hands only ....