Taxability of Income of Spouse

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A salaried individual gifts his wife £10,000 monthly for share market investments. He seeks clarification on whether capital gains are taxable as her income or should be clubbed with his. The consensus is that income from gifted amounts from a husband to his wife is generally taxable in the husband's hands under clubbing provisions (Section 64(1) of the IT Act). However, if the money is given for household expenses and any savings are then invested, clubbing provisions may not apply.

Deepak Rawat

Deepak Rawat (Querist)

20 November 2021 Respected Team,
I am salaried person and I give per month Rs 10000 to my wife from my salary. My wife is an house wife and she invest that amount in Share market through her Demat account.
Thus, I want to know on Capital Gain on her Demat account will be taxable as her Income or will be clubbed with my Income ?
As per me, she can file her individual ITR and can claim that capital gain as her income.
Please guide.
Thanking You

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

21 November 2021 There is difference in savings, and the investment of total gifted amount.
As per the available data, it will be clubbed in your income.

Deepak Rawat

Deepak Rawat (Querist)

22 November 2021 It is gifted amount Sir. So as per me, any income from that gifted amount should be taxable in hand of my wife. Plz correct if I am wrong.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

23 November 2021 When it is gifted by husband to his wife, any income earned by wife over the gifted amount is taxable in the hands of husband, as per clubbing provision under sec. 64(1) of IT act.

Deepak Rawat

Deepak Rawat (Querist)

23 November 2021 Thank You Sir.
And what If it is given for Saving ? Please guide, how it will be defined that a particular sum is given as gift or saving...

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

23 November 2021 When the amount is given for household expenditures (or pin money) say monthly about 30 thousand, out of which if she saves around 10K every month and deposits to her saving account.
Such sum when invested would not attract clubbing provision.

Deepak Rawat

Deepak Rawat (Querist)

23 November 2021 Thank You so much Sir

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

23 November 2021 For your information, the assessing officers are very well aware of the (super class) abilities of Indian housewives like, tuition, handicraft, beauty parlor, stitching, baking, Yoga classes, personality development events etc. etc...........

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