Good evening Mr Srikanth,
At the outset, I thank you very much for your timely responses to my earlier queries.
I would be retiring by the end of June 2020. I am planning to place deposits jointly making my wife as first applicant, out of terminal benefits viz, Provident Fund, Gratuity, Leave encashment, Pension Commutation, subject to Income tax. She would take care of tax liability of future interest income on these deposits, if applicable.
I would receive monthly pension, for which, Income tax would be my liability.
As I understand, there would not be gift tax liability for my wife, as the funds are given by me and have already been subjected to Income Tax by my employer at the time of settlement.
Kindly confirm. Else, there is any other stipulation, please let me know.
Narasimhan
1 Answers
Dear Narasimhan ji,
If you are gifting your retiral benefits to your wife then such transactions are tax-exempt.
But, any income arising out of re-investment of such amount(s) will be subject to tax liability (if any).
- Kindly note that rules of clubbing of income comes into picture if you gift a certain amount to your spouse, or minor children or Son’s wife. Any income earned by the recipient on the gift shall be clubbed with the income of donor (you).
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Thanks a lot. We are seeing your reply only today. Sorry for the late reply. 🙏🙏
Stay safe and take care sir. Happy retired life!