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Tax incident on Gift

Rajan Gumnani (Service) (114 Points)

23 September 2007

What is the tax incident on my wife and me if I decide to gift here some money by way of cheque? I am regular taxpayer with salary, Interest and rental income whereas my wife has only interest from interest and that to below 10K

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4 Replies

Late CA Sampat Jain (Chartered Accountant) (4772 Points)
Replied 23 September 2007

U/S 64 , following income will be clubbed with your income : "subject to the provisions of clause (i) of section 27, [* * *] to the spouse of such individual from assets transferred directly or indirectly to the spouse by such individual otherwise than for adequate consideration or in connection with an agreement to live apart ;" Therefore , income arising to your wife out of money gifted by you will be clubbed in your hands.

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dinesh (student) (51 Points)
Replied 24 September 2007

sampat is wrong...clubbing provisions arise only if such a transfer results in any income...but it is just a gift and as it is being given to his wife,there is no tax incident..

Rajan Gumnani (Service) (114 Points)
Replied 25 September 2007

Thanks for the info

CMA Gul S (Program Manager) (5910 Points)
Replied 25 September 2007

Hi Rajan, Dinesh is right there will be no implication of the tax for the Gift of 10K and section 64 will not be applicable here. But if this Amount is deposited in some funds thta generates income there will be tax implications