Applicable Tax on Your Gifts to Your Spouse and Clubbing of Income

Situation 1: Income earned on transferred Assets

Transfer of asset (other than house property):

Where there is a transfer of an asset (other than house property), directly or indirectly, from one spouse to the other, otherwise than for adequate consideration or in connection with an agreement to live apart, any income arising to the transferee-spouse from the transferred asset, either directly or indirectly, shall be included in the spouse income on tax return of the transferor-spouse.

Transfer of house property:

In the case of the transfer of house property, the provisions are contained in section 27. If an individual transfers a house property to his spouse, without adequate consideration or otherwise than in connection with an agreement to live apart, the transferor shall be deemed to be the owner of the house property and its annual value will be taxed in his hands.

Note: It is also to be noted that natural love and affection do not constitute adequate consideration.

Situation 2: Income from the accretion of the transferred Asset

It may be noted that any income from the accretion of the transferred asset is not to be clubbed with the income of the transferor.

The income arising from transferred assets alone has to be clubbed. However, income earned by investing such income (arising from transferred assets) cannot be clubbed and should be taxed in the hands of the Transferee.

Situation 3: Taxability of Gifts in the Hands of Transferee

Transfer of asset (other than house property):

Any sum of money received without consideration (i.e., monetary gift may be received in cash, cheque, draft, etc.) by an individual/ HUF will be charged to tax If the following conditions are satisfied:
1. A sum of money received without consideration.
2. The aggregate value of such sum of money received during the year exceeds Rs. 50,000.
But in case money is received from relatives then it's not charged to tax Relative for this purpose means:
● Spouse of the individual;
● Brother or sister of the individual;
● Brother or sister of the spouse of the individual;
● Brother or sister of either of the parents of the individual;
● Any lineal ascendant or descendent of the individual;
● Any lineal ascendant or descendent of the spouse of the individual;
● Spouse of the persons referred to in (b) to (f).

Hence no taxability of gifts in the hands of the spouse.

Transfer of house property:

When immovable property received by an individual or HUF without consideration (i.e. by way of gift) is not charged to spouse income tax in cases property received from relatives. And spouse covers under the definition of relatives hence no taxability of gifts in the hands of a spouse.
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Read more details on income tax spouse relief, taxability on gifts from spouse and clubbing of income here: [ Ссылка ]
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Disclaimer: Although all provisions, notifications, updates, and live demos are analyzed in-depth by our team before presenting to the public. We hereby provide our point of view only and tax matters are always subject to frequent changes hence advisory is only for the benefit of the general public. Hence neither TaxSmooth nor its designated partner is liable for any consequence that arises on the basis of YouTube videos.
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