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Question ID : 38157

How does clubbing ends?

If a husband has given a gift of Rs. 10 Lakhs to his wife for business, income from such business will be clubbed in the husband's hands. Now if he wants to end this clubbing, how can the same be done?

Posted by Badlani on May 21, 2019

Filed Under DIRECT TAXES

Answer ID : 76599

In this case income from the business will be taxable in the hand of husband. In the same way, the money gifted to major children (above 18 yrs) will not be clubbed in your hand. So in case you have children who are 18 years or older who are either studying or earning at a lower tax slab than you, then gifting your surplus money and investing in their name will neither attract gift tax nor clubbing of income will apply. Income earned out of investments made by your major Children out of the gifts given by you will be taxed in their hands only.

Posted by CA. BISHT RAKESH on May 21, 2019
Answer ID : 76601

This clubbing cannot be ended. But if such money or business income is reinvented, further income will not be clubbed.

Posted by CA. chunauti dholakia on May 21, 2019
Answer ID : 76608

instead of a gift, give a loan at a reasonable interest. the wife can claim it as expense and the balance profit will be taxed in her hands without clubbing.

Posted by CA. VENKITARAMAN K V on May 21, 2019
Answer ID : 76665

Please clarify whether the business carried on by wife is partnership or not. please also clarify whether any of the daughters or son of the wife is willing to join the business etc. The amount of capital may be given as gift to them and thus reduce the income from the business in the hands of the wife and thus the clubbing with husband.

Posted by SIVADAS CHETTOOR on May 29, 2019