Gift to wife
This query is : Resolved
13 February 2019
I am a retired person having income from pension and bank interest only. If I want to make some cash gift from my savings to my wife who is a housewife, is that permissible under law? If yes, is there any specific procedure for it and what is that? Is there any upper limit per year of such cash gift?
14 February 2019
you can gift ANY amount to your wife every year. There is NO ceiling
14 February 2019
But, I wanted to know if there is any specific procedure by which such cash gift to wife should be done?
If I transfer the amount from by bank account to that of wife's by an account payee cheque, will it be a valid gift?
If I transfer the amount from by bank account to that of wife's by an account payee cheque, will it be a valid gift?
14 February 2019
yes, that will be a valid gift. What you can do is write a letter confirming the said transfer as gift and let your wife acknowledge the same
14 February 2019
Thank you for quick clarifications.
Now, my question is about tax on interest generated from such cash gift to wife if she opens fixed deposit from it in her name. Who will be responsible to pay income tax for it? My wife or I myself? You may kindly consider one point in this connection that the amounts I intend to make gift to my wife are all white being my pensionary benefits from the Government and taxed interests from it deposited in banks+ surplus from pensions over the years properly tax paid and shown in ITRs every year and processed by Income Tax department.
Is there any possibility and scope under income act to hold such gift to wife as evasion of tax?
Now, my question is about tax on interest generated from such cash gift to wife if she opens fixed deposit from it in her name. Who will be responsible to pay income tax for it? My wife or I myself? You may kindly consider one point in this connection that the amounts I intend to make gift to my wife are all white being my pensionary benefits from the Government and taxed interests from it deposited in banks+ surplus from pensions over the years properly tax paid and shown in ITRs every year and processed by Income Tax department.
Is there any possibility and scope under income act to hold such gift to wife as evasion of tax?
15 February 2019
assuming you transfer Rs.500,000 to wife. Further assuming that your wife invests the said amount @10% p.a.The interest of Rs. 50,000/- earned on this Rs.500,000/- is clubbed in your income.
If your wife saves this interest Rs.50,000/- p.a. and invests in fixed deposit carrying 10% p.a. interest. The interest of Rs.5,000/- earned on this is NOT clubbed in your income.
If your wife saves this interest Rs.50,000/- p.a. and invests in fixed deposit carrying 10% p.a. interest. The interest of Rs.5,000/- earned on this is NOT clubbed in your income.
15 February 2019
Yes, I am aware of this rule of income tax. Previously I had done it after retirement. I used to transfer some amount to my wife to open FD in bank. I always paid income tax on the interest generated in my wife's name clubbing with my income. But, I faced some operational difficulty due to inefficiency/negligence of bank people. In spite of filing form 15H by my wife as her total income would always remain below the ceiling limit, the bank some times deducted tax at source(TDS).On the other hand I had to club that interest income with my own income. For this I re-transferred back all such amounts after maturity in my name and opened FDs with my name as 1st holder.
Now that Sec 80TTB has been introduced exempting upto Rs.50,000/ of FD interest from total income for Sr citizens, I was thinking of transferring some amount to wife as gift so that she can open FD in her name in view of my advanced age.
Kindly, explain one thing. After clubbing Rs.50000/ interest generated from gifted Rs.500000/ in the first year with my income, if my wife reinvests the entire Rs.550000/ for 2nd year, do I have to again club part of total interest out of Rs.500000/ while the rest of interest will be my wife's?
Now that Sec 80TTB has been introduced exempting upto Rs.50,000/ of FD interest from total income for Sr citizens, I was thinking of transferring some amount to wife as gift so that she can open FD in her name in view of my advanced age.
Kindly, explain one thing. After clubbing Rs.50000/ interest generated from gifted Rs.500000/ in the first year with my income, if my wife reinvests the entire Rs.550000/ for 2nd year, do I have to again club part of total interest out of Rs.500000/ while the rest of interest will be my wife's?
17 February 2019
yes. go ahead. your intention is right
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