Tax implications on gratuity gifted to spouse; when clubbing provisions apply

A homemaker wonders about the income tax implications after her retired husband decides to gift her a portion of his gratuity as an acknowledgement of her support. Ask Wallet Wise decodes whether this transfer will attract any tax liability or clubbing provisions.

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I am a homemaker. I hold some fixed deposits, and the interest income received from them is below the basic exemption limit every year. Recently, my husband retired after serving for over 30 years. He has received service gratuity. He believes that my wholehearted support was a key factor in helping him render satisfactory service until his retirement, enabling him to complete his service and receive retirement benefits without any adverse remarks. Hence, he has decided to transfer part of his service gratuity lump sum in my name. I want to know the income tax implications of this. Please enlighten me.

Expert advice: Your husband has come up with a novel idea to compensate you for supporting him during his career. The gratuity will be taxed in your husband’s hands, over and above the exemption available to him.