• Is there any tax on gifting money to wife, what is the limit to it?

My 80c already full with PF and tution fee with my 2 kids

i am planning to gift some money to my wife and she will deposit in my kids PPF account, is this legal?
what are the tax documents needed to show that i have gifted money to her and that she credited in PPF accounts.
Asked 11 days ago in Income Tax from Chengalpattu, Tamil Nadu

Dear Sir,

 

Hope you are doing well !!

 

When you transfer some amount in your wife’s account as a gift and she uses the same for investing in any assets, investments or fixed deposits etc then the income from such assets or investments is chargeable to tax in your hands due to clubbing provision.

 

Every gift should be supported by a Gift DEED for future aspect.

Payal Chhajed
CA, Mumbai
1458 Answers
11 Consultations

4.9 on 5.0

Is she earning any income?

If yes then she can deposit such amount with her own money. If no then against what income will she claim such deduction.

Also clubbing provisions will apply if she uses such money and earn some income out of same.

So it's not a good idea to gift the money to wife.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
831 Answers
5 Consultations

5.0 on 5.0

Hi

Yes, this is absolutely legal.

However, you should get a gift deed prepared for the same. Alternatively, you may execute notarized statements for such gift.

Any income arising from such investment made from the funds gifted by you shall be clubbes and thus shall be taxable in your hands.

Lakshita Bhandari
CA, Mumbai
2470 Answers
91 Consultations

5.0 on 5.0

That's what I am asking what is the motive behind her investing in PPF account is she going to claim deduction for same if yes then that will also be passed on to you as per clubbing provision.

So if you are gifting her this amount for some benefit then it's not a good idea because she won't get it.

 

Naman Maloo
CA, Jaipur
831 Answers
5 Consultations

5.0 on 5.0

In case of PPF, interest is exempt. So, there would be no addition to your income. You should show such interest annually in your ITR under Exempt income.

Lakshita Bhandari
CA, Mumbai
2470 Answers
91 Consultations

5.0 on 5.0

Dear Sir,

 

Yes, all Interest from provident fund are exempt u/s.10(11).

As interest on PPF is exempt from tax hence there is no need to worry.

But if you withdraw the amount from PPF account before the 5 years then it will be taxable.


Payal Chhajed
CA, Mumbai
1458 Answers
11 Consultations

4.9 on 5.0

I don’t understand why are you doing this.  In case you just want to invest in kids PPF, you can do yourself also without transfer. 

There is no tax on gifting to wife. However, any income earned on that funds will be clubbed wit your income. 

Do note that interest on PPF is not taxable- so it does not impact clubbing. PPF you can keep for any period with minimum period of 15 years. Premature withdraw is permitted after 7 years. 

You can make a gift deed in name of a wife for gifting. And other documents like bank transfer etc can be maintained 

Jasmina Jain Shah
CA, Greater Mumbai
181 Answers
3 Consultations

5.0 on 5.0

Hi,

- Draft a gift deed on plain paper. It is legal if she will deposit into kids PPF account. Any income generated to wife out of gift amount will be clubbed in the hands of husband. Interest from PPF is exempt from tax. You are required to show such interest as exempt income.

 

Thanks

Vivek Kumar Arora
CA, Delhi
1971 Answers
75 Consultations

5.0 on 5.0

Hi

 

Execute a notarized Gift deed to support a transaction.

Yes she can invest anywhere.Income arising out of that money will be clubbed in your income as per law but here As PPF interest in fully exempt,nothing will be added to your income.

 

Hope it helps

Swati Agrawal
CA, Indore
848 Answers
2 Consultations

5.0 on 5.0

Dear Sir,

 

If a husband gifts anything to his wife without adequate consideration then it is taxable in the hands of husband. The gift is clubbed with husband’s income. Similarly, any gift from wife to husband in the absence of adequate consideration is taxable in the hands of wife due to clubbing provisions.

Any income generated from such gift is also taxable in the hands of giver. For example, if you gift bank FD to your spouse then interest income generated above Rs. 10,000 is taxable in your hands.

Karishma Chhajer
CA, Jodhpur
819 Answers
4 Consultations

5.0 on 5.0

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