Scss in the name of wife -- tax implications.

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Kamalakar Agashe

Chief Engineer Turbine

84 Points Posted on 18 December 2015

I am 63 years old retired person going to live on interest income now and have opened an SCSS account depositing the maximum amount of Rs 15 Lacs.

My wife is also 60 years now and she is going to open SCSS account in her name depositing maximum amount of Ra 15 Lacs from our Joint Bank account in which my PAN Card is attached. She has applied for a PAN card and will attach it to her SCSS account.

As per clubbing provision the interest on SCSS account of my wife may be treated as my income but I would like to avoid it and following questions are my questions:

Is transferring Rs 15 Lacs to wife as compensation for performing household duties for 39 years of married life an "adequate consideration"?

If it is "adequate consideration" are we liable to pay any tax immediately on Rs 15 Lacs transferred to her.

If it NOT an "adequate consideration" I know that the interest income is to be clubbed with my income but she could re-invest the interest earned and the subsequent interest would be treated as her income.

Kamalakar

Replies (4)

Quick Summary

The discussion focused on tax implications of investing in SCSS in a spouse's name. It covered clubbing provisions, transfer of funds, interest taxation, and whether giving money to a spouse as a loan or consideration can avoid clubbing of income.

Ramanathan

Article

51 Points Posted on 18 December 2015

Dear kamalakar,

simple way solve your problem is, by showing that you have given the money to your wife on loan and the interest that she gets from SCSS account will be taxed in her hand, not yours.

Even if TDS is deducted in your pan no. then claim it as your income from other sources and claim deduction immidetly saying that it belongs to you wife.

If your wifes total income crosse Rs 300000(Senior citizen) then she need to file her return.

If you have anyother quries pls let me know

Thank & Regards

Kamalakar Agashe

Chief Engineer Turbine

84 Points Posted on 20 December 2015

Originally posted by : Ramanathan
	Dear kamalakar, simple way solve your problem is, by showing that you have given the money to your wife on loan and the interest that she gets from SCSS account will be taxed in her hand, not yours. Even if TDS is deducted in your pan no. then claim it as your income from other sources and claim deduction immidetly saying that it belongs to you wife. If your wifes total income crosse Rs 300000(Senior citizen) then she need to file her return. If you have anyother quries pls let me know Thank & Regards

You mean I can give interest free loan to my wife and the ITO won't put any notional interest on the Loan and also won't treat it as transfer u/s 60 (transfer of income without transfer of assets).

Kamalakar

Ramanathan

Article

51 Points Posted on 22 December 2015

you can say that you account the interest on cash bases, therefore you need not pay tax on it right now

Aashok Kumar Sharma

Finance/Compliance Consultant

77990 Points Posted on 06 November 2026

Updated position (this 2015 thread is still read):

• Clubbing: if you give your wife money (from your income or the joint account) to invest in SCSS without adequate consideration, the interest is clubbed with your income (Sec 64(1)(iv)). Opening the account in her name doesn't shift the tax.

• A genuine interest-bearing loan to the wife (at a market rate, documented, with interest actually paid to you) avoids clubbing, since the transfer is for adequate consideration. Courts accept this. An interest-free "loan" doesn't work.

• Her own funds (her savings, stridhan, retirement benefits) are not clubbed.

• Interest received on cash basis: SCSS interest is credited quarterly, so it must be taxed on the accrual or receipt each year. Deferral isn't possible.

• Current limits: SCSS maximum deposit is Rs 30 lakh per person (from 1 April 2023), so you each can invest up to Rs 30 lakh. Deposits qualify for Sec 80C (old regime only).

• TDS: above Rs 1 lakh interest a year for seniors (from 1 April 2025). Form 15H can be given if tax is nil. Claim Sec 80TTB (up to Rs 50,000, old regime).