Tax on money gift

This answer is based on the assumption that the amount of 30 L you are transferring is paid by you out of savings / tax paid money.

Q1 and Q2 are both similar with change in recipients. Answer will be same in both scenario as both Wife and Father in Law are covered in the definition of relative in Section 56 of Income Tax Act. The word "Recipient" may  be interpreted as your father in law for Q1 and Wife for Q2.

(a) The amount of 30 L Transferred will not be considered as Income of the Recipient.

(b)  After the Gift, money will become the property of the recipient. Hence, any Interest earned on the same will be treated as Income of the Recipient only

Hello,

If you give such amount to your father in law, it will be covered in the defination of gift to a relative and therefore not taxable in the hands of recipient. Any interest earned on the same will be considered as your father in law's income.

In case you give this amount to your wife, then again the gift will be non taxable in her hands. However any interest earned on the same may be assessed by the department in your income by invoking clubbing provisions if this arrangement results in any sort of tax arbitrage. 

For detailed discussion on tax planning in this regard, I would advise you to take telephonic consultation.

Best Regards, 

Dear Sir,

Hope you are doing well !!

-No, there will be no tax liability on your father in law and wife for receiving money from you as the gift from the relative is not covered in the taxable income in the hands of the recipients.

-in case of wife, interest earned on the same will be treated as your income only due to clubbing provisions. 

It is advisable to take a phone consultation for proper tax planning & entire procedure.

No it won't be considered as his income.

Any interest on same will be his income.

It won't be considered as your wife's income.

Interest will be clubbed as your income under section 64.

For more info book phone consultation.

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Thank you

A1. No gift of Rs. 30 lacs would not be considered as income in the hands of your father in law. If your father in law files ITR, show the amount of gift of Rs. 30 lacs under exempt income head in the ITR. Interest income from gift will be taxable in the hands of your father in law.

A2. No gift of Rs. 30 lacs would not be treated as income in the hands of your wife. Interest income from gift amount would be clubbed in your hands. Income from Interest income of Gift amount will be taxable in the hands of wife.

Any interest income on that amount will be considered as your income in both the cases.

Hello,

1. Amount transferred to your father-in-law will be covered as a gift to a relative and therefore won't be taxable in the hands of the recipient. Interest income earned on the same will be considered as the income of your father-in-law.

2. Amount transferred to your wife will also be considered as a gift to a relative and won't be taxable in the hands of the recipient. However, in this case, interest income earned on the same will be considered as your income due to clubbing provisions.

Regards,

CA Hunny Badlani

Hi Gifts received from relatives are exempt from tax. by virtue of Section 56 of the Income Tax Act. According to the IT Act, following persons would be considered as relative ​--spouse, brother or sister, brother or sister of the spouse, brother or sister of either of the parents, any lineal ascendant or descendent, any lineal ascendant or descendent of the spouse, spouse of the persons referred above. Therefore gift given to father & wife is exempted.but interest on such amount will be taxable. Interest income will be clubbed in your income. Please have a phone consultation for details discussion.

Hi

Money is also considered as an asset so if you gift your wife some money – the provisions of clubbing of income would still be applicable. In such a case – the asset/money transferred to the spouse can be considered as a gift and is tax free at the time of receipt.

However, the income generated from this gift would be taxable in the hands of the person who has made the gift and not in the hands of the person who has received the income.

The provisions of Clubbing of Income would be applicable even if the form of asset is changed by the receiver of gift.

Hi

Money is also considered as an asset so if you gift your wife some money – the provisions of clubbing of income would still be applicable. In such a case – the asset/money transferred to the spouse can be considered as a gift and is tax free at the time of receipt.

However, the income generated from this gift would be taxable in the hands of the person who has made the gift and not in the hands of the person who has received the income.

The provisions of Clubbing of Income would be applicable even if the form of asset is changed by the receiver of gift.

Hi

1. (a) No. Gifts received from relatives is exempt.

    (b) Interest would be taxable in your father in law's hands.

2. (a) No. Gifts received from relatives is exempt.

    (b) It will be taxed in your hands due to applicability of clubbing provisions.

Thanks for the question.

In my opinion, neither of the transfers amounting to 30L will be included in father-in law's or wife's income. Since the gifts exceeding 50000, but being between relatives are exempt from tax.

The interest earned on the income will be included in father in law's income but in case of wife, it will be clubbed with your income.

Feel free for any clarification. All the best.