12 October 2011
Hi, Please help! A Client wants to gift around 5-10 lakhs to his wife. Which would be a better option and their implications ? (i) Cash gift- which would later be invested by wife in shares for trading/ investment. (ii) Buy shares and then Gift those shares worth 5-10 lakhs to wife. Is there any legal formality to be completed while gifting to wife?. thanks
12 October 2011
Your client can gift, anything in cash or kind, to his spouse.But, the income from the investment, which is made out of gift amount, will be taxable in the hands of transferor/donor not in the hands of transferee/donee, because clubbing provision would attract. It is better to give a loan and it should be given by way of Account payee cheque/DD.
Querist :
Anonymous
Querist :
Anonymous
(Querist)
12 October 2011
Sir, One more option Can the client buy a land worth 10 lakhs and then gift it to his wife with no tax implication for either.
12 October 2011
If shares are gifted and dividend recd will be clubbed in the hands of the husband and exempt. What about Capital gain on sale of those shares(short term/ long term)?.(Long term is so far exempt). What about reinvestment of those capital gains and income received thereon?. Will clubbing cease/continue to apply?
12 October 2011
In my views, the capital gains on sale of shares or building will be taxable in the hands of the transferee... - no clubbing ! Only incomes like dividend/interest/rent which are directly generated from the gifted asset will be taxable in the hands of the transferor - clubbing provisions apply ! Income from incomes generated are always taxable in the hands of the transferee - no clubbing !