Accountability of inetrest earned on FD

[KASTURI SETHI]

Dear all experts,

If I gift one FD of more than Rs.one lakh to my wife, whether interest earned on that FD will be accounted for towards my income or my wife's income for payment of Income Tax ? Pl. guide. Thanks.

AI Summary

Clubbing of income rules assign interest from a gifted fixed deposit to the transferor for tax purposes, barring recipient's senior-exemption.
Interest on a fixed deposit gifted to a spouse is attributed to the transferor under the clubbing of income provisions; accordingly the transferor must include such interest in his taxable income, and the spouse cannot claim exemptions against that interest though her other independent income remains assessable to her.