Can a husband gift to wife in cash under income tax act

Page no : 2

DK MULLA (Accountant) (47 Points)
Replied 23 July 2013

Hi Sir | Madam

If my taxable income is Rs. 260000/- and I give gift Rs. 60000/- to my wife then I have to pay tax on Rs. 60000/- ?

Upgrade to CAclubindia Pro. Subscribe Now!

Ali Khokhar (CA Practice ) (28 Points)
Replied 03 April 2016

PLEASE TELL ME A GOVERMENT EMPLOYEE WIFE, GIVE TO HER HUSBAND ON RETIRMENT. FOR TAX SAVING PURPOSE.

(Guest)

Although Sec 61 states that income from irrevocable transfer of asset shall not be clubbed in the hands of transferor , in case Transfer to Spouse Sec 64(1)(iv) shall prevail over Sec 61 . Even if irrevocable transfer of asset has been made to the spouse as gift, the income from such irrevocable transfer to the spouse shall be clubbed in the hands of transferor in above case.

Mohini Thaper vs. CIT 83 ITR 208 (SC)

(Guest)

Mr DK Mulla,

1. If your taxable income after all deductions is Rs 260000/-. There won't be any tax for you as income upto 250000/- is exempt and then there is rebate u/s 87A.

2. there will not be any tax on Rs 60000/- gifted to wife as you have to 1st consider the whole 2.6 L for taxation and then gift to her out of it.

3. If she invests the amount of rs 60000/-in say fixed deposits or other investments, and earnes interest of say Rs 6000/-, that interest will be clubbed with your income.

(Guest)

Mr Ali, If on retirement, the wife gifts an amount to her husband, the transfer will not be taxable. Only the income earned from the gifted amount will be taxed with her as explained above.

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!