Public Provident Fund transfer to spouse

Income Tax
1

I have invested in Public Provident Fund. It has reached the maturity. I want to transfer the fund to my spouse’s Bank account.

  1. Will my spouse have to pay IncomeTax on the amount.
  2. Since PPF is exempt from Tax, will there by any other taxation issue with this transfer. Coz it is my life’s contribution so it is a decent amt.

Thank you

2

Hey @mschetanbiz

While gifting the entire PPF maturity amount to your spouse is tax-exempt, any income they earn by investing that amount will be clubbed with your income and taxed in your hands as per clubbing provisions.

Hope this helps!

3

Thank you for the response. My intention of transfering the money to my spouse is for her financial security. I don’t want to deal with anything follow-on threads connected to me.

How to transfer the amt where there are no threads attached with me. It will be my spouses money, Nothing to do with me.

4

One loophole for clubbing provisions - Buy stocks, transfer it to wife, wife sells the stocks, you still need to pay taxes for gain or loss between the time you buy and the time your wife sells the stocks. Post selling the stocks, the amount is no longer tied to you.