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Tax on Fixed Deposit interest for house-wife.

(Querist) 30 July 2008 This query is : Resolved 
I am a salaried employee and I pay tax every year after availing all the tax benefits. I want to invest in my wife's name Rs.One lakh in FD Scheme of a private Bank for 1 year.If the interest at the time of maturity is Rs 10500, will any tax be applicable as per Income Tax laws?. I feel that tax should not be applicabe since my wife is not working(She is house-wife).
Request for reply from Tax experts.

R.Rajendran
Guest (Expert) 30 July 2008
You can gift one lakh to your wife and she will deposit in bank and earn interest. Then there is no tax on interest. She will not be liable to tax upto 145000/-. It is better if she does all the savings for you in her name.
R.Rajendran (Querist) 01 August 2008
Dear Mr.Kotresh,
Thanks for your reply.Please clarify the following:
1)To whom should I inform that I have gifted Rs. 1 lakh to my wife? Is it to the Bank Official?
2)When should I inform that I have gifted the money to my wife? Is it during investing the money in the Bank FD?

R.Rajendran


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