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What to do so that no IT notice will come?

Ashim kr Ray (social service) (1691 Points)

15 June 2016

Sir, A husband of govt employee made FD in the name of his wife amounting Rs 5 lakh from his saving whereas his wife is housewife. So no IT return required for his wife ,so in this case what are the option availiable so that no income tax notice for the big amount of FD in the name of his wife.please suggest

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CA MANISH BINDAL (CHARTERED ACCOUNTANT ) (535 Points)
Replied 15 June 2016

Here One problem has arise as per section 64(1)(iv) clubbing provision will be appliable here as per this section any assets transferred by one spouse to another spouse withoud adequate consideration in this case income from such asset will be clubbed in the hands of transferor. Hence income from such assets is taxable in the hand of husband. The best way to invest in the name of spouse is to giving him loan and then make FD means husband must give her wife certain amount as loan and then wife must have to invest in FD in her own name in this case no clubbing provision will applicable.

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Thakur Shanker Singh (TAX & GST-Practitioner ) (119 Points)
Replied 15 June 2016

Dear Ashim,

The Amount of Rs.5Lakh transfer by Husband to his wife were tereated as Gift.

Interest on F.D is Taxable @ 10% Exceed of Rs.10000/- .
TDS is Deducted from Interest Income. If she not comes in Taxable Income (Submit Form 15G/15H ) to bank for Exemption of TDS Deduction for Interest Income.

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Prashant Rajput (An insatiable Learner) (889 Points)
Replied 15 June 2016

First off,FD interest is taxable whether the amount is ₹1 or 10K.
Steps suggested:
1)Claim tax deductions under Sec 80 C since FD is for 5 yrs
2) Disclose FD interest in tax return for every year.
3)Be upfront no need to file form 15 G/H.If u do file in the name of wife,what will you mention in source of income.

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Prashant Rajput (An insatiable Learner) (889 Points)
Replied 15 June 2016

Sorry ignore Point 1 as FD is not for 5 yrs.And you can't claim tax deduction

gopal (article assitent) (41 Points)
Replied 15 June 2016

Just clubbed the interest on fd in the hand of husband and feel free about

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CA Rashaad Meer (...) (129 Points)
Replied 16 June 2016

@ Thakur S Singh
Transfer of 5L by the way of gift wont attract Tax.
however income generated from such Amt will be clubbed in the income of transferor by the virtue of sec 64(1)(iv)

CA Rashaad Meer (...) (129 Points)
Replied 16 June 2016

To avoid Tax
1. show it as a loan(even if its interest free) since clubbing provision is attracted only when there is a "transfer of Asset" and not when "Loan is extended"
2. submit 15G