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Income Clubbing

09 April 2018

My Father,a retired Rly employee(60yrs.)got gratuity of Rs.9 lakhs.Rs.5 lakhs transferred to mother's account.So,Rs.5 lakhs will be include on mother's income or whole gratuity amount will be clubbed under father's income?

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Saifullah Khalid (Autodidact/Curious ) (633 Points)
Replied 09 April 2018

Originally posted by : Dipam Guha Thakurata
	My Father,a retired Rly employee(60yrs.)got gratuity of Rs.9 lakhs.Rs.5 lakhs transferred to mother's account.So,Rs.5 lakhs will be include on mother's income or whole gratuity amount will be clubbed under father's income?

As your father was a central govt employee so the gratutity he received is totally tax free (upto 20 lakhs tax free for central govt employee after 7th pay commision ...based on formula : (basic salary plus dearness allowance) X number of completed years of service X 15/26 ...and recently only parliament passed a bill and doubled the tax free gratutity upper limit from 10 lakhs to 20 lakhs for private sector employees ).

So the gratutity amount he received is tax free in his hand and he can gift as much as he wish to your mother and same will not be taxable in your mother`s hand as gift to spouse is tax free as per IT act ...BUT any income generated out of this gifted amount will still be deemed as your father`s income (though this resultant income thereafter will be totally your mother`s property and will be out of clubbing net) .

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