TAX PLANNING FOR GIFTS TO WIFE!

Remember that income from accumulated income is outside the purview of Section 64!

      In the context of the clubbing provisions under Section 64 of the Income-tax Act and Section 4 of the Wealth-tax act, it is important to note that the income liable for clubbing is such income arising from the amount of the gifted asset and the wealth liable for clubbing is such wealth representing the amount of the gifted asset. If the transferee continues to accumulate the income arising from the gifted asset and further income is generated from such accumulated income, such further income is not liable for clubbing under Section 64. Similarly for purposes of wealth-tax, such accretions to be gifted asset are also not liable for clubbing. (more…)