Gifting Property to Your Spouse? Read This First
If you gift a property worth more than ₹45 lakh to your spouse, the tax department will now automatically know about it. Sub-registrars must report such gift deeds to the Income Tax department. This means the income earned from that property will be added to YOUR tax return — not your spouse's — under a rule called 'clubbing of income'.
Many Indians gift property to a spouse thinking it reduces the family's tax bill — but under India's clubbing rules, this trick has never legally worked. Now, with automatic reporting, the taxman can catch it without even auditing you.
Any property gift above ₹45 lakh to your spouse is now automatically flagged to the Income Tax department, meaning rental or capital gains income from that property will be taxed in your hands — not your spouse's.
Key Takeaways
Check your Annual Information Statement (AIS) on the Income Tax portal — any property gift above ₹45 lakh will now appear there, and you must account for any rental or sale income from it in YOUR ITR, not your spouse's.
If you've already gifted property to your spouse and the rental income is being filed under their name, consult a CA immediately — you may need to revise past returns to avoid penalties and interest under Section 64 of the Income Tax Act.
Avoid gifting income-generating assets (property, FDs, stocks) to a spouse purely to split tax liability — the clubbing rules neutralise the benefit and the new reporting makes non-compliance much riskier.
Gifting a house or flat to your spouse has been a popular — but legally shaky — tax-saving strategy for years. The idea was simple: transfer the property to the lower-earning spouse, let the rental income get taxed at their lower slab, and save money. But India's Income Tax Act has always had a counter to this, called the clubbing of income rule under Section 64. The new development is that the government has now made it nearly impossible to ignore.
Sub-registrars across India are now required to report property gift deeds valued above ₹45 lakh to the Income Tax department. This information flows directly into your Annual Information Statement (AIS), the same document that captures your bank interest, stock trades, and property purchases. So if you gift a flat worth ₹60 lakh to your spouse, the tax department sees it — automatically, without any investigation.
Here's what clubbing actually means: if you gift an asset to your spouse (without adequate consideration, i.e., without them paying fair market price), any income generated from that asset — rent, interest, or capital gains — is added back to your taxable income. The transfer doesn't reduce your tax burden at all. What the new reporting rule does is close the gap between what the law says and what people were actually filing.
For most honest taxpayers, this is just a compliance reminder. But if your family has done such a transfer and has been filing rental income under the spouse's PAN, it's time to revisit. Speak to a chartered accountant and check whether a revised return is needed. Penalties for underreporting can be steep — up to 200% of the tax evaded in serious cases.
If you're planning to buy a second property for investment purposes, consider taking joint home loans instead of gifting — both co-borrowers can claim tax deductions on interest and principal. Platforms like GoCredit can help you compare joint home loan options and understand how co-borrowing affects your CIBIL score. Pro tip: gifts to children (minor or adult) and parents also have specific tax rules — always consult a tax advisor before transferring any high-value asset within the family.
Explore Smart Home Loan Options
Open GoCredit App →