I would like to place my retiral benefits in FDs as follows: a) wife's(housewife) name b)major daughter(student)'s name and c) self
whether intt. on both will be clubbed in my income
can i show wife's PPF as exemption?
9 Replies
Z
( )
(2965 Points)
Replied 08 January 2012
According to Sec 64(1)(iv) Interest on FD of wife will be clubbed if transferred for inadequate consideration
To escape this you can show that she has taken 0% interest loan from you
Interest on daughters FD will be clubbed only if the transfer of asset i.e FD is recoverable
If you make irrecoverable transfer to your daughter and then the money is invested then interest from it will not be clubbed in your income (sec 62)
Wife PPF as exemption?
EDITED : PPF exemption can also be availed (thanks Mr. Vineet Kumar Sharma for pointing out the mistake)
Vineet Kumar Sharma
(Chartered Accountant)
(316 Points)
Replied 08 January 2012
If you made the deposit in wife's PPF A/c, then you are eligible to have a deduction of PPF Deposit u/s 80C.
Z
( )
(2965 Points)
Replied 08 January 2012
Thanks Mr. Vineet Kumar Sharma for correction
I think maximum limit is 70k per account . But overally in 80c,80ccd,80ccc the limit is 100,000 (individually or in aggregate)
natarajan
(manager)
(52 Points)
Replied 08 January 2012
Sir, If you gift these deposits to your wife and major daughter it will not be clubbed with your income
Vinod
(CA in Practice)
(445 Points)
Replied 09 January 2012
Income from revocable (ie. if it contains any provision for retransfer of income or asset to the transferer) transfer of assets is taxable in the hands of the transferer as per Sec. 62.
According to Sec. 56 (2) (viii), money can be transferred to relatives without attracting tax to the recepient. But income from investing the above money is still hit by Sec. 62, if the transfer is revocable.
Vineet Kumar Sharma
(Chartered Accountant)
(316 Points)
Replied 09 January 2012
Mr. Natarajan
Sec 64(1)(iv) provides that If assessee transfer any assets directly or indirectly to his/her spouse (i.e. Wife), otherwise than adequate consideration, then any Income derived from such an assets shall be clubbed with Assessee's Income.
Hence, if Mr. Babugr gift his FD to his spouse, then definitly his spouse is not entitled to tax on Gift, but, afterward all the Interest earned on such FD is clubbed with Mr. Babugr's Income.
You are correct in relation with gifting to Major daughter.
natarajan
(manager)
(52 Points)
Replied 09 January 2012
Mr.z, The latest RBI circular increased the ppf deposit from 70,000 to Rs.one lac
Shyam Kanabar
(Article)
(160 Points)
Replied 09 January 2012
Mr. Natarajan
Sec 64(1)(iv) provides that If assessee transfer any assets directly or indirectly to his/her spouse (i.e. Wife), otherwise than adequate consideration, then any Income derived from such an assets shall be clubbed with Assessee's Income.
Hence, if Mr. Babugr gift his FD to his spouse, then definitly his spouse is not entitled to tax on Gift, but, afterward all the Interest earned on such FD is clubbed with Mr. Babugr's Income.
You are correct in relation with gifting to Major daughter.
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