Clubbing of income - 64(1)(iv)

Hello,
I am planning to gift a certain amount to my spouse ( e.g X rupees) and she will put in Y rupees from her saving account. The total amount X+Y will be invested in an asset which will generate fixed income in my spouse account.

Query is 1) will the clubbing provision apply here for the income generated from above asset and will it be taxed under the husband’s income
2) if the fixed income which gets generated is again re-invested in an FD by my wife, will the returns be taxed to her income or to the husband’s income.

Hey @Raghavendra_Yalkur,

With regard to your queries,

  1. Yes, clubbing shall apply here and you will have to bear the tax liability on the income generated from “X” amount i.e., the amount that was gifted.
  2. If the income earned is reinvested, then your spouse will have to bear the tax liability and clubbing provisions shall not apply.

Hope this helps!

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