Gifting to Spouse? Here’s the Income Tax Twist You Must Understand

From gifting money to your spouse to selling gold jewellery for property purchase—here’s how key tax provisions apply to your everyday financial decisions.

1. Can I gift money to my spouse and invest it under their name to save tax?

Query by: Ashok Sharma

You can gift money to your spouse without any limit under Section 56(2), as gifts from a specified relative (like spouse) are not taxable in the recipient’s hands.

🚫 However, under Section 64(1)(iv), if the gifted amount generates income (e.g., interest from a fixed deposit), that income is clubbed with your taxable income — not your spouse’s.

🔍 Key Takeaway:

• Gift is tax-free, but interest income will be taxed in your hands if it’s invested by your spouse.

2. Is TDS applicable on GST when buying a property above ₹50 lakh?

Query by: T V Mahadevan

As per Section 194-IA, TDS at 1% must be deducted by the buyer if the sale consideration exceeds ₹50 lakh.

But here’s the catch:
📄 CBDT Circular No. 23/2017 clarifies that if GST is separately mentioned in the sale deed, then:

• TDS should be calculated on the sale value excluding GST

✅ For example:
If flat cost = ₹52 lakh and GST = ₹2.6 lakh
Then, TDS = 1% of ₹52 lakh = ₹52,000
Not on ₹54.6 lakh

3. Is capital gains tax applicable on sale of gifted gold jewellery?

Scenario: Daughter selling jewellery gifted at the time of wedding, 10 years ago

Yes, capital gains tax applies on the sale of gifted jewellery, as it’s treated as a capital asset under Section 2(14).

📌 Here’s how it works:

• Since it was gifted, your daughter’s cost of acquisition = your original purchase price (as per Section 49(1))
• Held for more than 2 years, so it qualifies as long-term capital gains (LTCG)
• LTCG is taxed at 20% with indexation under Section 112

💡 Exemption Option:
Under Section 54F, she can claim LTCG exemption if:

• Entire net sale proceeds are used to purchase or construct a residential house
• She does not own more than one house at the time of sale
• The property can be jointly held with her husband, but her share of investment must be identifiable

Summary of Key Tax Rules Explained