I am retired and have three sources of income - bank interest, rent, and a monthly amount paid by my son. Kindly let me know under which section the amount given by my son is exempted and which income tax return (ITR) do I need to fill.
The money given by your son is to be treated as a gift to you. Under Section 56(2) (x) of the Income Tax Act, 1961 which is applicable for and upto the financial year 2025-2026, the gift is to be treated as income of the recipient if the aggregate value of all gifts in a financial year exceeds Rs 50,000. This is subject to the exception in respect of gifts received from specified relatives. Son is included in the definition of specified relatives, and therefore, the money received from your son and treated as gift is not your income and is not required to be disclosed in the ITR.
Since your income comprises only bank interest and rent, you can file ITR 1 provided your total income does not exceed Rs 50 lakh and you are not otherwise ineligible to use ITR 1.
I understand that gifts received from non-relatives are exempt up to 50,000 in a year. If I get Rs 1 lakh from non-relatives, will the taxable amount be the amount in excess of 50,000?
Under Section 56(2)(x) of Income-tax Act, 1961, and its corresponding section 92 (2) (m) and 92(3) of Income-tax Act, 2025, the gifts received are not taxable in the hands of the recipient as long as the aggregate value of all the gifts received from all the sources during the year does not exceed Rs 50,000. But once the aggregate value of all the gifts crosses the threshold of Rs 50,000 in a year, the total value of all such gifts become taxable in the hands of the recipient except the value of gifts received from specified relatives.
I have two flats - one in Navi Mumbai and another in Mumbai. Both have housing loans. I am staying in the Mumbai flat and the Navi Mumbai flat is given out on rent. The rent is transferred to my wife's account who is a homemaker. What are the tax implications for me? How much tax do I need to pay on the rental income?
Any income arising from an asset becomes taxable in the hands of the owner of such property even if the same is received by someone else. Such receipt of income by another person is treated as application of income. Since the flat is owned by you, the rental income has to be offered for tax by you. In respect of the rent received, you get a standard deduction of 30 per cent of the rent received. The deductibility of interest for both the loans will depend on the tax regime chosen by you.
The rent transferred to your wife’s account will be treated as a gift made by you to your wife and clubbing provisions will come into play in respect of income arising on the money so transferred and invested by your wife.
So in case your wife invests the money transferred by you, any income arising on such investment will be clubbed in your hand.
Please note that clubbing applies in respect of investments made from the gifted asset/money and does not apply on the income accruing on investment made from income already clubbed. The clubbing will continue to apply till the marriage lasts even if the assets are sold and get converted into another asset.
The author is a tax and investment expert and can be reached at jainbalwant@gmail.com
(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)
