I am salaried person & my spouse is house wife. My father in law gifted Rs.500000/- to my wife after our marriage. We deposited this money in to NSC in both of our name. Is the interest earned through this is taxable to me? If we put this money only on her name, then is the interest earned through this is taxable to me.
Hi,
To all CCItes = Below I am sharing my views. If Im wrong, kindly rectify.
Two Income Tax provisions will be applicable over here. First, 'Gifts' under 'Income from Other Sources'. Gift received from relative is exempt. Your father in law is relative (under I Tax Act) for you both. Hence, Rs. 5 lacs is exempt and not taxable in anybody's hand. Neither you both nor your father in law.
Now, 'Clubbing of Income' related provisions. I think, interest earned on these 5 lacs will be taxable in the hands of your father in law. Please keep in mind that interest amount is nowhere affected. It will be received by you both, only it will be taxable in the hands of your father in law.
However, if you invest such interest amount, and on that INTEREST amount deposited if you get subsequent interest, it will be taxable in the hands of deposit holder and not to your father in law.
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