Recently, I got married. At the wedding, my wife and I received a lot of cash as gift. We are both salaried and pay income tax. Do we have to show the cash received at the wedding as income and pay tax on this?
Gifts from strangers are taxable under Section 56 of the Income Tax Act, 1961, under the head of income from other sources. There are a few exceptions and your case is covered therein. Amounts received by you on the occasion of marriage are not considered taxable. However, you would need to maintain the record of amounts received, along with the names and address of relatives/friends , so that in case of scrutiny/enquiry by the tax authorities, you can substantiate the claim.
I am a retired government official and most of my savings are in the form of joint bank fixed deposits (FDs) with my wife. Will both of us be taxed on the interest income earned from the FDs? Other than this, I get pension, on which I am already paying income tax. Can my wife alone pay tax on the interest income from FDs?
Indian tax laws stipulate a concept of clubbing of income, which provides that if the assessee transfers any asset to his/her spouse without consideration, then any income earned on such asset shall be clubbed with the taxable income of the assessee only. Therefore, since the FD has been created out of your savings, the interest income on such FD shall be included in your taxable income only and your wife cannot report this interest as her income in her tax return. However, please note that the interest income earned on interest reinvested in FD can be treated as your wife's income for income tax purposes.
The views expressed are expert's own. Send your queries to yourmoney@bsmail.in
Kuldip Kumar, partner and leader, personal tax, PwC India, answers your questions
