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Gifting assets to a spouse or minor child triggers Sec 99, Income-tax Act 2025 (old Sec 64) clubbing, income from gifted assets is clubbed with the donor's income. This is a common trap.
HNI wealth · HNI Tax
Gifting strategy: shifting wealth to lower-income family members
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Provisions
IT Act, Sec 92(2)(m) (old 56(2)(x)) | Sec 99 (old 64; clubbing) | Transfer of Property Act
Analysis
What works: Gift to an adult child (18+), no clubbing. Income from gifted assets is taxed in the child's hands at their slab rate (potentially much lower). Gift to parents, no clubbing. Gift to sibling, no clubbing. What doesn't work: Gift to spouse, income clubbed. Gift to minor child, income clubbed until age 18. Gift from HUF to Karta, complex, tax advice needed. Estate planning angle: Systematic gifting to adult children reduces future estate value (no estate duty currently, but potential future legislation) and creates a tax-efficient family income structure.
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