Gift (Peculiar Case)

Tax planning 527 views 2 replies

May God Bless You

Others

71 Points Joined May 2010

Sirs,

I am in a peculiar situation. Kindly Advice me.

When I was a NRI 7 years ago I gifted 30 Lakhs to my wife (who is a house wife) which she invested in tax exempted RBI Bonds on her sole name and they already got matured one year ago. She received 15 Lakh rupees tax exempted interest.

The principal and interest was deposited back again to bank account which is on joint name of myself and my wife.

But then during the course my situation totally changed. Due to mental illness constraints I am not able to work and now I am taking rest at home. Which means that myself is unemployed and my wife is also housewife (unemployed).

My question is:

1) My wife can gift back (portion or total) of original amount (i.e. 30 Lakhs) which I gifted her 6 years ago?

2) Can she gift to me the tax exempted RBI bond interest income received by her (i.e. 15 Lakhs) ?

As I am not doing good in my health, I want FD on my name as a future security. Because of my ill-health I am worried about my security now. Kindly advice me with respect to income tax.

For convenience we have funds parked in our Joint Account.

Srikanth

Replies (2)

Amir

Learner

4016 Points Joined December 2009

Dear Sir,

I just hope that you get well soon & live a happy & healthy life.......God bless...........!

As far as ur query goes - The sum which u gifted to ur wife was never treated as ur wife's money for Income tax purposes & even now it is ur money only (if the gift was given after ur marriage)

The interest as u mentioned was tax exempt - So no worries about it. Again if the gift was given after marriage then this interest also belongs to you only. (even though the bonds were in the name of ur wife)

Now from that joint account you can make FD out of thid money (principal+interest) in ur sole name - No issues of any sort...The income of interest on this FD will be taxable in ur hand....

Ur anyother query in this regard is most welcome...

May God Bless You

Others

71 Points Joined May 2010

Many thanks for your kind good wishes...

I have the following questions after reading your reply.

1) Once that amount gifted to wife, whether the gift can be taken back? I read in one site that gifts cannot be taken back one gifted to wife. Is that true? If that is the case then can I take back the Principal and Interest amount? Pls Advice.

2) I want to keep the tax-exempted interest (15 Lacs) with my wife and keep portion or full original amount (30 Lacs) on my name so that she can develop her own corpus funds so that she is also happy. Any Interest she earns on this interest income will be hers and taxable in her hands. Is that true? Pls Advice

3) Taking back the original gifted amount and leaving the Interest income with my wife is permissible by Income Tax? Because we both need not pay tax on this by doing this way. Is not this a tax evasion? Pls advice.

Srikanth