I’ve purchased a flat in my wife’s name, and the entire payment is being funded by me. I transfer the required amount to her bank account whenever the builder raises a demand. Should this be shown as a gift from husband to wife? If so, in whose income tax return should it be reported?
Amit Maheshwari Tax Partner, AKM Global: As per Section 64(1) of the Income Tax Act, 1961, if an individual transfers an asset to spouse, directly or indirectly, the income arising from that asset is clubbed with the individual’s income. In your case, though the flat is in your wife’s name, since it was fully funded by you, the income from it— whether rent or capital gains—will be clubbed with your income and must be reported in your income tax return (ITR). If the amount involved is substantial, maintain documentation, such as bank statements, income proofs, and past ITRs, to establish the source of funds and the genuineness of the transaction. Additionally, under Section 56(2)(x), any money received from a relative without consideration is exempt from tax.
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