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Wife's Income Taxed With Husband Income Many taxpayers think that if they transfer money to their wife's bank account for investing in assets, they may reduce tax liability. However, under Section 64 of the Income-tax Act, 1961, this strategy may not work as expected. If your wife's income generat
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FAQ :
Clubbing of income means that if a husband gifts money to his wife and she earns income from investments made with that money, that income can be taxed in the husband's hands under Section 64 of the Income-tax Act, 1961.
Income types subject to clubbing include interest from fixed deposits and savings accounts, capital gains from mutual funds and share markets, and rental income or gains from gold investments made with gifted money.
No, clubbing generally applies only to the first instance of income earned from the gifted money. Income earned on reinvested interest or gains is typically taxable in the wife's hands, not the husband's.
For ITR-2 or ITR-3, you need to select 'Schedule SPI' to enter your spouse's income details. Then, in the TDS section, you can claim credit for TDS deducted in your wife's name by selecting 'Modified Flow' and entering the deductor's TAN and TDS details.
If the wife gifts the money back to the husband and he makes an investment, any income or capital gains generated will be taxable in the husband's hands, as the source of investment is now from the wife.
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