Gift to a Spouse

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contractor
10 Points Posted on 22 October 2020

My father is a super senior citizen. He has transferred money from his bank account to that of my mother's bank account stating the purpose as a gift to family while doing the online transfer. Now, my mother who is a senior citizen also, has converted a part of the amount she received through this transfer as a FD /MMD. Will my father be taxed for the income which these deposits generate?  WIll the clubbings provision apply here?

Also what is the advantage of my mom investing this amount as a MMD in terms of IT?

 

 

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On 22 October 2020 at 21:55 Report
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Quick Summary
This discussion explores the tax implications when a father gifts money to his wife, who then invests it in Fixed Deposits (FDs) or Money Multiplier Deposits (MMDs). The core concern is whether the income generated from these investments will be taxed in the father's hands due to 'clubbing provisions'. The consensus suggests that if the wife has no other source of income, the interest earned on these deposits might be clubbed with the father's income. However, gifting directly to an adult child who invests it would generally not fall under clubbing provisions, with the income being taxable in the child's hands. The use of Form 15H for tax exemption on interest is also discussed.

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Accountant
3662 Points Posted on 22 October 2020
No, your father is not liable to pay any tax from generating income from FD

Generating icome is your mother
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On 22 October 2020 at 22:59
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contractor
10 Points Posted on 22 October 2020

Okay. If that is the case, what is this "Clubbing provision"? Can you please explain? Articles on that say, the interest accumulated on the FD invested by a wife from a gift received from her husband gets taxed as part of the husband's slab as she is not salaried. For example, point 3 in the article below says so. 

https://www.paisabazaar.com/tax/tax-on-gifts-in-india

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On 22 October 2020 at 23:21
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Tax consultant
5895 Points Posted on 23 October 2020
Your father will pay tax for the interest if your mother has no source of income means your mother is non earning hence can comes below the taxable income and bank interest can't be tax free
so it could be in your father hand taxable as per clubbing it
money multiplier deposit is treated same as fd interest expect the interest comes to saving account from saving side will be treated as saving account interest
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On 23 October 2020 at 00:33
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Accountant
3662 Points Posted on 23 October 2020
Agree with Ms. Ayusmita if your mother had no as source of income
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On 23 October 2020 at 00:43
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contractor
10 Points Posted on 23 October 2020

Oh- so, is there no advantage in terms of Income tax to my father,  if he father gifts money to my mom? 
 

what if the money sits in just her savings account? Will the intrest accrued on that will also be taxable?

What if he gifts me, an adult child who doesn’t have an income and I invest it as a FD in my name? Will that be coming under clubbing provisions?

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On 23 October 2020 at 01:24
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contractor
10 Points Posted on 23 October 2020

Also, isn’t there an amount determined like 5lacs exemption with 15H on deposits? My understanding is that any interest accrued on FDs beyond 5Lacs per annum will be taxed. 

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On 23 October 2020 at 04:09
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197 Points Posted on 23 October 2020
Yes it is advisable to take gift in your name and your income it won't be clubbed in your father's income.
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On 23 October 2020 at 10:40
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Tax consultant
5895 Points Posted on 23 October 2020
Interest accrued in saving interest is taxable after certain expemption as per act
if you're father gives you money and you invest in fd it will taxable in your hand as you are major or say adult and no clubbing provision applicable for you

now form 15h
it is applicable when tax liability is nil after considering the rebate available under section 87A of income tax act and if there's is no clubbing provision from the assessee
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On 23 October 2020 at 12:25
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379 Points Posted on 23 October 2020

Yes. FD int will be clubbed with your father income. However if your mother invests FD interest part in another FD then interest on this second FD is her income and not to be clubbed with fathers income

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On 23 October 2020 at 15:11
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contractor
10 Points Posted on 23 October 2020

In my mother’s case there is no other source if income other than these interests on her bank accounts. They aren’t anywhere bear 5lacs. She has submitted 15H to the banks. Now, will the clubbing apply in her case. Sorry to ask repeatedly. We really are concerned.  Most of the deposits are MMD and only one is FD. Thanks

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On 23 October 2020 at 19:13

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