Money gifted to your wife won’t be taxable

 








To find out whether your income shall be taxed in India, you need to establish your residential status as per the I-T Act of India for the relevant financial year (FY). Note that this status may change year after year and therefore it needs to be determined for every FY. You can test your residential status in the following manner.

Conditions: a) you are in India for 182 days or more in the FY; or b) you are in India for 60 days or more in the FY and 365 days or more in the four FYs immediately preceding the relevant FY. Additional conditions: You are resident in India in two of the 10 FYs immediately preceding the relevant FY; and you are in India in the seven years immediately preceding the relevant FY for 729 days or more.

If you meet any of the first set of conditions and both the additional conditions, you shall be considered a resident in India. If you meet any of the first conditions but do not meet the additional conditions, you shall be considered a resident but not ordinarily resident (RNOR) in India. If you do not meet any of the first conditions, you shall be a non-resident in India. So long as you are a non-resident or RNOR in India, the income that is earned and received by you outside India shall not be subject to tax in India.\

The money gifted to your wife will not be subject to tax in India as she is a specified relative as per the I-T Act. The money received by her shall not be taxable in your or her hands. In case she invests this money and an income is earned from it, there may be tax implications for you.


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