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Limit to Tax free loan to spouse

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S R Reddy

C.A

62 Points Posted on 04 September 2022

Dear sir,

I client received more than one crore as capital gains from sale of housing property. Out of this amount, he wants to lend about 50 lakhs to his wife as interest free loan for a period of 5 years. Please confirm whether this transaction attracts income tax either for him or his wife. They are both individual tax payers under the income tax law. Thanking you in anticipation.

S R REDDY

Replies (4)

Quick Summary

This discussion addresses whether an interest-free loan of £50,000 from a husband to his wife, funded by capital gains from property sale, attracts income tax. The general consensus is that providing an interest-free loan to a spouse is permissible and does not inherently attract income tax, provided the transaction is conducted through official bank transfers and is a personal arrangement. The loan's purpose (business vs. personal) might be a consideration, but the act of lending interest-free itself is not typically taxed.