Refund of tds if wife gives tutions for earnings....

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Vk Mishra

18 Points Joined April 2017

Dear sir/maam
My wife's earnings include 24000/- for FY 2016-17 from tutions to kids at home and interest of 13000/-from FDs whose principle amount were transfered by me to her account and thereafter made FDs on her name...TDS of 1300/- has been deducted ...what shlould i do now? :-

1.Should i need to club the interest amt in my gross salary and pay tax and ask refund of TDS for wife while filing her returns?
or
2. Her interest need not be clubbed in my gross salary and i can file her refund return stating income 24000/- under income head and ask for TDS refund.

Kindly guide for the best solution?
Regards

Replies (4)

Gurmet Siingh

Chartered Accountant

413 Points Joined September 2007

Where you provide money to your spouse and that money is invested by the spouse and a certain income is generated (from such money that you gave your spouse).The income that arises from such investment done by her can be clubbed to your income. However, if your spouse reinvests the income portion and earns further income then such income may not be clubbed with your taxable income.

In your case, you need to club the interest income with your income and file the return.In your Return you have to show the Income under the Schedule SPI. Give PAN of your wife in the column provided for TDS.

Further, you will have to file separate return for your spouse excluding interest income. The TDS schedule may be filled up but claim of TDS is not required to be made. So in the column of TDS to be credited, you may write as "0"

Vk Mishra

18 Points Joined April 2017

thankyou Mr Gurmeet for you guidance...kindly refer to the first para of your reply:-

1. Fds are made as cummulative so amt and interest are automatically reinvested. Still TDS is deducted by the bank.

2. is there any way to give money to wife which she can save as Fds and no tax liability comes on either of us...at least till the threshold level to 2.5lakh.

3. your valuable guidance will be highly appreciated..

Regards

Gurmet Siingh

Chartered Accountant

413 Points Joined September 2007

Interest is taxable on due basis(whether paid immediately or later). It means every year when interest is credited, tds will be deducted. It doesn't make any difference whether it is cumulative or not.

On your second point, since interest is part of your income, you can't escape tax. The only way you can save from tax is when your wife invests this money in PPF(15 year lock in period) or equity based mutual fund schemes(Not taxable if invested for more than 1 year).