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Gift to wife is taxable or not

gupta (Accountant) (305 Points)

28 July 2016

Dear Sir,

Can a person make gift in cash/ cheque to his wife. If yes then what is the tax impact in both of them.

Wating for a reply

Regards

Jayanta

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11 Replies

Udgam Koomar (Tax Technologist) (1949 Points)
Replied 28 July 2016

There is no tax impact as it comes under relative definition. If any income is earned out of that gift amount, its taxable.

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 28 July 2016

Agree with above opinion.

If any income is earned out of that gift amount then clubbing provision apply & it ll taxable in husband's hand.

Balram Choudhary (Sr. Accountant) (112 Points)
Replied 28 July 2016

There is no upper limit and mode to the amount you can give as your spouse is in the list of specified relatives whom you can gift any sum without attracting a gift tax. However, If invest the gifted money, the Section 64 of the Income Tax Act, a provision for clubbing income, comes into play.

JAGJIT KASHYAP (TAX CONSULTANT) (109 Points)
Replied 28 July 2016

Sir,

There is no tax implication when an assessee gift/transfer cash to his wife/relative [Section 56(2)(vii) of Income Tax Act] and if his wife/relative invested money eg. in Bank FD, then interest on FD will be taxable in hand of his wife (no clubing), provided the money gifted/transfered should be irrevocable (Section 62 of Income Tax Act, 1961).

Thanks for sharing.

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JAGJIT KASHYAP (TAX CONSULTANT) (109 Points)
Replied 28 July 2016

Therefore in that case assessee should make gift/transfer by gift deed which mention that, said sum is irrevocable.

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 28 July 2016

Jagjit Ji your point is correct but clubbing provision still apply....

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 28 July 2016

As per section 64(1)(iv) : Income from assets transferred directly or indirectly to the spouse without adequate consideration.

You transfer an asset to your spouse directly or indirectly without receiving adequate consideration (does not include where asset is transferred as part of a divorce settlement) – income from this asset will be clubbed with your income.

gupta (Accountant) (305 Points)
Replied 29 August 2016

Thanks to alls for their valueable feed back . But still I have some confusion in the folloing case :-

1) If a person give a sum of Rs. 5,00,000/- as a gift to his wife . On receiving this his wife make trading business of share and earned some money, now my question is this income from trading of shares ( done by his wife ) will clubbed with her husbands income -- or -- it will treated wifes income.

2) After some years say 1 or 2 years if his wife return back the amount i.e. 5,00,000/- what will be the tax treatment ?

Waiting for your valueable feed back.

Regards

Jayanta

Ram M. Dixit (CA Final (Author)) (376 Points)
Replied 29 August 2016

Since wife is relative for an individual as per definition of relative, any sum of money or value of property can be given her as gift. It will not be taxable.