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I’ve purchased a flat in my wife’s name, and all payments to the developer are being made from her bank account. The money was transferred from my account to hers, and I’ve already paid tax on it. While filing her income tax return (ITR), how can I show this transfer as a gift? Also, do I need to report this gift in my own ITR?
Umesh Kumar Jethani Founder, ApkiReturn: If you transfer funds from your account to your wife’s account to buy a flat in her name, it’s considered a gift. As per the Income Tax Act, gifts between spouses are tax-free. For your wife’s income tax return, she can report this amount as exempt income, typically in Schedule EI (say, in ITR 2). While this isn’t mandatory, it clarifies the source of funds for the flat purchase, reducing the chance of tax scrutiny. In case of your tax return filing, you don’t need to mention the gift. Since you’ve already paid tax on the money before transferring it, no further reporting is required at your end. To support this arrangement, draft a simple gift deed—a document that mentions the money is a gift from you to her—and keep it with bank statements showing the transfer. This documentation ensures transparency, if questions arise later. You should also be aware that if the flat generates income, like rent, it will be taxed in your hands, not hers, due to the clubbing provisions under Section 64 of the Income Tax Act.
Also read | I am 46 and I own a house. Should I buy a second property or invest in REITs for rental income?
I have gifted a few long-term holding shares to my minor son via online inter-depository transfer. We plan to sell these after he becomes a major. Since the shares were gifted at zero value, no STT was paid on the transfer. As I understand, there is no tax liability on the gift as it was made to a close relative. Tax will apply only when he sells the shares. I hope this understanding is correct. Kindly advise how I should report this transaction in my income tax return.
Shubham Agrawal Senior Taxation Adviser, TaxFile.in: Inter-depository transfers do not amount to sale of shares, hence there is no STT on them. There is no tax liability at the time of making the gift to your child as they come under the definition of relatives as mandated by the In come Tax Act. Long-term capital gains tax at the rate of 12.5% exclusive of surcharge and cess will apply to your son in his ITR in the year of sale if the shares are sold when he is major. The date of acquisition for him will be the date on which the shares were purchased by you. Since this is a gift to close relatives and exempt in law, there is no need to dis close the same in your ITR. In such cases, it is recommended to have a gift deed mentioning the asset and its value, the nature of your re lationship with the receiver, and that the gift is irrevocable during your lifetime. These are some key ingredients which make this transfer tax-free as per section 56(2)(vii) of the Income Tax Act. This will help in answering any future tax queries on this matter.
Also read: Father receives Rs 4 lakh as cash gift in son’s marriage and wins income tax case of unexplained income under Section 69A; Know how
Have a question for the experts? etwealth@timesgroup.com
I’ve purchased a flat in my wife’s name, and all payments to the developer are being made from her bank account. The money was transferred from my account to hers, and I’ve already paid tax on it. While filing her income tax return (ITR), how can I show this transfer as a gift? Also, do I need to report this gift in my own ITR?
Umesh Kumar Jethani Founder, ApkiReturn: If you transfer funds from your account to your wife’s account to buy a flat in her name, it’s considered a gift. As per the Income Tax Act, gifts between spouses are tax-free. For your wife’s income tax return, she can report this amount as exempt income, typically in Schedule EI (say, in ITR 2). While this isn’t mandatory, it clarifies the source of funds for the flat purchase, reducing the chance of tax scrutiny. In case of your tax return filing, you don’t need to mention the gift. Since you’ve already paid tax on the money before transferring it, no further reporting is required at your end. To support this arrangement, draft a simple gift deed—a document that mentions the money is a gift from you to her—and keep it with bank statements showing the transfer. This documentation ensures transparency, if questions arise later. You should also be aware that if the flat generates income, like rent, it will be taxed in your hands, not hers, due to the clubbing provisions under Section 64 of the Income Tax Act.
Also read | I am 46 and I own a house. Should I buy a second property or invest in REITs for rental income?
I have gifted a few long-term holding shares to my minor son via online inter-depository transfer. We plan to sell these after he becomes a major. Since the shares were gifted at zero value, no STT was paid on the transfer. As I understand, there is no tax liability on the gift as it was made to a close relative. Tax will apply only when he sells the shares. I hope this understanding is correct. Kindly advise how I should report this transaction in my income tax return.
Shubham Agrawal Senior Taxation Adviser, TaxFile.in: Inter-depository transfers do not amount to sale of shares, hence there is no STT on them. There is no tax liability at the time of making the gift to your child as they come under the definition of relatives as mandated by the In come Tax Act. Long-term capital gains tax at the rate of 12.5% exclusive of surcharge and cess will apply to your son in his ITR in the year of sale if the shares are sold when he is major. The date of acquisition for him will be the date on which the shares were purchased by you. Since this is a gift to close relatives and exempt in law, there is no need to dis close the same in your ITR. In such cases, it is recommended to have a gift deed mentioning the asset and its value, the nature of your re lationship with the receiver, and that the gift is irrevocable during your lifetime. These are some key ingredients which make this transfer tax-free as per section 56(2)(vii) of the Income Tax Act. This will help in answering any future tax queries on this matter.
Also read: Father receives Rs 4 lakh as cash gift in son’s marriage and wins income tax case of unexplained income under Section 69A; Know how
Have a question for the experts? etwealth@timesgroup.com
( Originally published on Aug 26, 2025 )
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
