Tax on income from investment made in wife’s name: Tax rules state that any investment made by husband in wife’s name shall be treated as a gift.
Tax on income from investment made in wife’s name: Ahead of Women’s Day, making an investment in the name of wife could be one of the best gifts in current times. However, one needs to be aware of tax implications of income earned from such an investment.
Tax rules state that any investment made by husband in wife’s name shall be treated as a gift. Also, gifts received from relatives are exempt in the hands of the transferee.
According to Chirag Nangia, Director, Nangia Andersen India, the wife needs to disclose the amount of investment as exempt income in Schedule EI of the Income tax Return (ITR) form. (Read details here)
For example, if the husband has invested in the Senior Citizens Savings Scheme in wife’s name, the interest income will be clubbed in his total income in Schedule SPI of ITR. However, the wife is not required to disclose the income so clubbed, according to Nangia.
Tax on cash gift from relatives
According to Income Tax Rules, cash gift received from relatives is fully exempt. The relatives for whom this rule apply include spouse, brother, sister, any lineal ascendant or descendent of the individual or spouse.
Cash gift from others
According to Section 56(2)(x) of the Income Tax Act, 1961, tax implication arise if the total money received by an individual exceeds Rs 50,000 without any consideration during a financial year. Such amount is taxed as “Income from other sources”
According to Dr Suresh Surana, Founder, RSM India, if the total cash received from one or multiple person is more than Rs 50,000 in a financial year, then such amount will be tax as per the applicable slab rate.
Hence, to avoid tax, the aggregate of gifts received should not be more than Rs 50,000 in a financial year.
If tax implication arise, it is to be paid by the person, as per experts.
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