International Women’s Day is just round the corner and the best gift you can give to your wife is investment. You also need to know what tax would come with such a gift/investment. According to tax rules in India, any investment made by husband in name of his wife is treated as a gift.
Gifts that are received by the relatives are also exempted in the hands of the transferee. The only condition is that wife needs to disclose the amount of investment as exempted income in EI Schedule of ITR form.
You can invest in Senior Citizens Savings Scheme in name of your wife. The interest earned from the investment will be clubbed with your total income in Schedule SPI of ITR. In this case, wife doesn’t needs to disclose the income as it is clubbed already.
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According to tax rules, cash gift received by relatives is also exempted from tax. Those relatives should be your brother, sister, spouse and lineal ascendant or descendant of individual or their spouse.
Section 56(2)(x) of Income Tax Act, 1961 says that if the total money received is more than Rs 50,000 without any consideration in a financial year then it would be taxed as income from other sources. Make a note that total income earned as a gift from one or more people should not exceed more than Rs 50,000 if you need to exempt from tax.
But in case if you get cash gifts more than Rs 50,000 then show it as your income and pay your taxes. As a good citizen you should not hide your income and pay your taxes to the government on time.
While filing ITR you should declare income from all sources otherwise Income Tax Department will raise a query on account of mismatch during time of processing.