suresh (Accountant) (85 Points)
24 September 2010I gave some amount to my wife for a property purchase and the property was registered her name. the amount which i gave for the property was my own income (salary). what is the tax treatment for this amount, can i show it as a loan given to wife. also how it will be treated in my wife's ITR?
ashish khandelwal
(article)
(166 Points)
Replied 24 September 2010
@*CS Siddharth Bumb. *
(B.Com, CA Final, CS )
(5270 Points)
Replied 25 September 2010
it is depend on your intention, if you treat as loan then you should collect interest from your wife and if it is interest then it will be clubbed as stated by Mr ashish
RAJ KUMAR
(FINANCE MANAGER)
(1393 Points)
Replied 25 September 2010
IF U TAKE INTEREST THEN IT IS WIFE INCOME OTHERWISE IT IS ITO BE CLUBBED UNDER UR INCOME.
sachin kakkar
(CA)
(188 Points)
Replied 25 September 2010
hi suresh,
dnt go with above solutions..
u dnt need to do any thing .....just treat it as a gift...bec wife is ur relative so as per sec 56(2)(6) gift given to a relative in cash/kind is not taxable...so enjoy.....and others plz clear your concepts.......hope it hepls
sachin kakkar
(CA)
(188 Points)
Replied 25 September 2010
and 1 thng more to show any advance as loan just book entry is needed , loan can always b tax free...there's no compultion of collection of intrest.....
SHUVRO
( (WANT TO LEARN) )
(175 Points)
Replied 29 September 2010
NICELY EXPLAINED BY SACHIN . U CAN ALSO GO THROUGH THE FOLLOWING
CA Pramod Jain
(manager finance)
(1577 Points)
Replied 29 September 2010
i think best solution is as u did u can show the amount as loan in your books and ur wife will show the same it as unsecured loan from urs.
thiruvayu
(FCA)
(155 Points)
Replied 29 September 2010
Two options available:
Option 1) Treating it as gift: Two sections are applicable. One is 56(2)(vi) and second is 64(1)(iv). Former is applicable to your wife and later is applicable to you.
A) Your wife's taxable income: Gift received from relative is exempted u/s 56(2)(vi). Hence the gift received from you is totally exempted from tax in the assessment of your wife's income.
As the gift tax is abolished there is no need to pay gift tax by you.
B) Your taxable income: U/s 64(1)(iv) it amounts to transfer of assets without adequate consideration. Hence if any income accures from the house purchase your wife will be clubbed in your total income. If no income is accrued from the house purchase then nothing will be clubbed in your assessment.
Option 2)Treating it as loan: Two sections are applicable. One is 24(b) and another one is 56. Former is applicable to your wife and later is to you.
A) Your wife's taxable income: Any interest that she may pay to you is deductible under the head income from house property u/s 24(b).
B) Your taxable income: What ever interest she pays to you is taxable in your hands u/s 56.
Rate of Interest: If you treat the amount as loan you can charge interest at any rate. Even you can charge no interest as they amount is your salary savings and you have not borrowed those funds. But it is safe to charge some rate of interest which is not less than savings bank interest rate.
To select Option A or B is tax planning. It depends upon the following 3 major issued:
1. Your income tax slab rate
2. Your wife income tax slab rate
3. Whether the house property generates income
Hope the question is answered
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