An individual gifts listed shares to his wife, with no agreement to live apart, and she receives dividends on them. How are the dividends taxed under the Income-tax Act, 2025?
Question and options
An individual gifts listed shares to his wife, with no agreement to live apart, and she receives dividends on them. How are the dividends taxed under the Income-tax Act, 2025?
Included in his income under section 99(1)(a)(ii)
Included in his income under section 96
Included in his income as deemed owner under section 25
Taxed in her hands, as she now owns the shares
Answer and explanation
Section 99(1)(a)(ii) of the Income-tax Act, 2025 includes in an individual’s income the income from assets transferred to the spouse without adequate consideration, other than under an agreement to live apart. Section 25 makes the transferor deemed owner only of house property, and section 96 applies where income is transferred without the asset.
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