Treatment of gift income?

My dad plans to GIFT a certain amount to my mother. And my mother wants to invest it as a Fixed Deposit.

We are confused whether the interest income from that fixed deposit would come under the taxable income of my father or treated separately as my mother's income? Please help. Thanks!

Replies (3)

There is a concept called Clubbing of income in Income Tax.

Sec 60 to 64 of income Tax are realted to clubbing of the income.\

Now there is provision laid down under sec 64 that if the one spouce gives the property to other spouce without consideration then the income generated from such property will be taxable to transferor.

So in your case if your father gives gift of money to your mother and your mother makes the fd of the same then the fd interest will be clubbed in your father's income.So your father has to pay tax on the fd interest.

Originally posted by : SIDDHARTH KOTHARI

There is a concept called Clubbing of income in Income Tax.

Sec 60 to 64 of income Tax are realted to clubbing of the income.\

Now there is provision laid down under sec 64 that if the one spouce gives the property to other spouce without consideration then the income generated from such property will be taxable to transferor.

So in your case if your father gives gift of money to your mother and your mother makes the fd of the same then the fd interest will be clubbed in your father's income.So your father has to pay tax on the fd interest.


Thanks Siddharth!
What if he gifts it to me or my sibling?
Will that have a different treatment?

It's my pleasure to answer your question!!!

Dear,

For your second question there are two alternative answers:

1) If you are minor,then the income generated from the gift given to you from your father will be clubbed in the iincome of the either of the parents having the higher income subject to the conditions laod down in sec 64(1A).

2) If you are not monor , then the income generated from the gift given to you from your father will not be clubbed  in the income of your father but tax to you.

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