Gifting Shares to My wife (Housewife with no income) worth more than 20 Lac

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1

Hi, I need to transfer shares to my wife and the value would be more than 50k and she is a housewife and I’m a salaried employee- and she has never file the ITR till now -

  1. Does she need to file an ITR ? And report the transfer of shares in the ITR ?

  2. If she sold the share and there is LTCG - will the gains will be clubbed in my income ?

  3. Who is going to pay the LTCG ? Me or her ?

  4. After the sale of shares- Does she need to file the ITR and mention about the sale and income ? If gains are even less then 12.5 Lacs (since no tax to be paid till 12.5 L of Income ?

2

Gifting shares to your housewife spouse is tax-free at transfer, but under Section 64(1)(iv), any subsequent LTCG from selling those shares will be clubbed with your income, meaning you are responsible for declaring and paying tax on those gains in your ITR.

3

Ok thanks for the response!

Have one more question related to this - if any dividend earned on these shares ; will that be added to my income ? Or the dividend will be treated as wife’s income?

4

Under the clubbing provisions of Section 64(1)(iv), income arising from assets transferred by an individual to their spouse without adequate consideration can generally be clubbed with the transferor’s income. The Income Tax Department’s ITR-2 documentation specifically requires taxpayers to report income of specified persons, including a spouse, that is required to be clubbed under Section 64.

So, in the scenario described on the page:

  • Gift of shares to wife: The gift itself generally isn’t treated as taxable income merely because the shares are worth more than ₹20 lakh.

  • Later sale by wife: The resulting capital gain can be subject to the spouse-clubbing provisions, depending on the facts and how the transfer was made.

  • Tax liability: The clubbed income is generally included in the transferor’s taxable income rather than simply treating the gain as independent income of the wife.

  • ITR reporting: Capital gains and clubbed income have to be reported in the appropriate return/schedules when applicable.

  • Dividends: The dividend question raised on the page should be analysed separately; don’t automatically assume that every subsequent income stream has identical treatment without checking the applicable clubbing provision and facts.

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