Tax Talk

After my husband’s retirement, he had gifted me some money (from his terminal benefits) and a deed of gift has been prepared accordingly. I am doing some business with that money. Is the income generated out of this money considered as my income or my husband's income for calculation of tax? Is there any limit for offering gift in a financial year?

— Ruma Dasgupta

According to the Income-tax laws, any sum of money received from a relative (which includes spouse) as gift is exempt from tax. Hence, the sum gifted to you by your husband shall be tax exempt in your hands. There is no limit on the amount which can be given as gift to the spouse.

Clubbing provisions would apply in respect of income accruing or arising to you, from any sum gifted to you by your spouse. Hence, the business income arising from the amount invested by you from the gifted sum will be clubbed in your spouse’s hands. Please note that according to the judicial precedents, the second generation of income, i.e. income from the invested income shall be taxable in your hands and not your husband’s.

My wife is diabetic and I am hypertensive and both of us are senior citizens. We periodically undergo check-ups as out-patients to consult the concerned doctors. Please advise whether expenses for these check-ups can be claimed under deduction of 5,000 u/s 80D of I-T Act for preventive health check-ups.

— K. Nageswara Rao

According to section 80D of the Income-tax Act, 1961, deduction up to Rs 5,000 is allowed in a financial year, on expenses made for preventive health check-up for self, spouse, dependent children and parents of the individual. The law has not clearly defined the term preventive health check-up. However, the same can be understood to mean any check-up related to medical cost, which is essentially to prevent or keep a tab on occurring of a disease or adverse medical situation. Since, in your case your check-up costs pertain to keeping a tab on your blood sugar-level / blood pressure levels, in order to prevent your medical condition getting adverse, the same may get covered under the ambit of preventive health check-ups.

It is pertinent to note that the deduction of Rs 5,000 is allowable within the overall limit of deduction applicable under section 80D for health insurance premium i.e. if you are already claiming deduction of Rs 20,000 for health insurance premiums paid by you for you and your wife (senior citizens), then you would not be able to claim an additional deduction of Rs 5,000 for preventive health check-ups.