1. Money given to spouse does not attract income tax

Money given to spouse does not attract income tax

My wife has a salary income of Rs 10 lakh a year on which she pays tax. Apart from that, I deposit Rs 25,000 every month into her account from my account for household expenses. Will she have to pay tax on the money that I deposit into her account and show it as income from other sources?

By: | Published: August 1, 2017 4:28 AM
The amount paid by you to your wife can be considered as gift which shall not attract income tax under the provisions of Income-Tax Act, 1961.

My wife has a salary income of Rs 10 lakh a year on which she pays tax. Apart from that, I deposit Rs 25,000 every month into her account from my account for household expenses. Will she have to pay tax on the money that I deposit into her account and show it as income from other sources?

– Punit Mehra

The amount paid by you to your wife can be considered as gift which shall not attract income tax under the provisions of Income-Tax Act, 1961. However, under clubbing provisions of this Act, any income accrued to her on such amounts would be clubbed in your income and you will have to pay tax on that.

How should one look at the taxability of the buy back option for IDFC infrastructure bonds Tranche 1 issued in December 2011? I had invested Rs 20,000 and opted for cumulative buy back option. It got exercised after five years of lock-in in December 2016 and I received Rs 30,780. Should I include the interest income of Rs 10,780 as income from other sources to be taxed as per my slab?
—George Krishnan

Generally, two options are allowed under such bonds, i.e. annual interest option and cumulative option. If one opts for the annual interest option, then such interest is taxed in the year of receipt. However, if one exercises the cumulative option then such interest received shall be taxable under the head capital gains. Hence, the income of Rs 10,780 received on the buy back of IDFC infrastructure bonds will be taxed under the head capital gains since the holding period exceeds three years, the long term capital gain shall be taxed at 20% with indexation benefits.

Do I have to pay income tax and GST if I sell my old jewellery?
— Paresh Ashar

You will have to pay income tax on sale of old jewellery on the amount of gains made thereon. The gain shall be classified as short-term if the jewellery is held for up to three years and shall be taxed at prevalent slab rates. However, if the jewellery is held for more than three years, the gain shall be considered long-term and shall be taxed at 20% and benefit of indexation of cost shall also be allowed. The sale of old jewellery shall not attract GST because this will not be considered as supply under GST laws as the transaction is not in the course of or furtherance of business. The issue has also been clarified in recent press release dated July 13, 2017 issued by Central Board of Excise and Customs.

The author is partner, Ashok Maheshwary & Associates. Send your queries to fepersonalfinance@expressindia.com

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