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POSTED BY ON July 29, 2013 2:40 pm COMMENTS (7)
My wife is housewife. I am giving some amount to her on monthly basis for household expenses. She saves certain amount from that and deposits that amount in her bank account. As per my understanding, this amount will be considered as her income. Please correct me if I am wrong.
I want to file tax return for my wife though her total income is not taxable. My query is where she should show money saved from amount given by me every month for household expenses. Whether that will be income from other resource or there is separate field for such income in ITR file?
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Giving money as cash to run household expenses is a planned activity, normally based on expeience on monthly expenses involved. Hence when a wife saves from this given amount, it will be reasonably small. Tax authorities permit this. Hence something like Rs 100 to Rs 400 per month is reasonable. However, in the example rightly given, money deposited in bank account, the IT officer would definitely havevreason to suspect that it is diversion of money, and this would not be allowed. There used to be a term ” kitty money savings” for the savings done by wife out of money given by her husband , given solely for the purpose of running the household every month
Hi Gopalakrishnan
Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also
Manish
Dear Yogesh, section 64 clubbing provisions are very clear to answer your query. Income generated from the income of the original gifted amount ‘ll be considered the income of the gift receiver. So in your example,the MIS income on reinvested 84000 Rs. ‘ll be your wife’s income.
Please do note, if you also invest the basic 6L Rs. again in MIS under your wife’s name, the interest from original 6L Rs. ‘ll be taxable again in your name.
Thanks
Ashal
Thanks FFC & Ashalanshu.
I have one more question. If I invest ~6100 pm in postal RD (with my wife as first account holder and I as second) then at the end of 5 years we can get 450000. My actual investment would be 366000 while interest amount is ~84000. I pay income tax on this 84000 interest amount. Now after end of 5 years, I take back my investment of 366000 and my wife invests 84000 in postal MIS. Then the interest earned on this MIS will be considered as my wife’s income or my income ? Who has to pay income tax on this MIS interest income ?
Dear Yogesh, frankly speaking, it’s a grey area. Say your mly income is 1L Rs. you are giving 50K to your wife to run the house. Now she manages to run with 45K and saves around 5K on mly basis. So this 5K is her income. Now change the numbers.
You transferred 80K to her account and she manages to run the show with same 45K and now 35K is resting in her account. Problem starts. 🙂
I hope my message is clear to you. if not, please feel free to discuss.
Thanks
Ashal
I read one old article http://growmoneyindia.blogspot.in/2007/12/tax-laws-specific-to-housewives.html
Also one of the consultants mentioned me this method for tax saving !
So wanted to clarify about what law says about such income generated by housewife
If you give money to your wife and get some return from it, YOU need to pay tax. rs. 1 or 1 L
Simple as that. SHE has no tax to pay or return to file.