Clubbing of Wife's Income from FD Investments

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This query is : Resolved

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A husband invested in his wife's name, leading to interest income for her. Due to income clubbing provisions, this interest may need to be added to the husband's taxable income, especially as he is in a higher tax bracket. The advice suggests filing the wife's return without the interest income and declaring the TDS as belonging to the husband, effectively clubbing the income with his tax filing.

sameer joshi

sameer joshi (Querist)

28 January 2025 A husband falls under the 30% tax bracket. He invested approximately 10 Lakhs in fixed deposits in his wife's name. The wife earned approximately Rs. 70,000 in interest, and TDS of Rs. 7,000 was deducted by the bank. Unaware of the income clubbing provisions, the wife filed her ITR and claimed a refund of Rs. 7,000.

In the current financial year, the wife is expected to earn around Rs. 200,000 in interest due to further investments in FDs. Some TDS has already been deducted.

Given the potential application of clubbing provisions in previous years, is there a risk of receiving a notice from the Income Tax Department?

Can we continue to file separate ITRs, or should we consider clubbing the wife's income with the husband's income this year?"