If you also transfer money to your wife’s account every month, then definitely check once where your wife is using that money because the Income Tax Department keeps an eye on your every move.
Income Tax Rules: If the wife is a housewife, then the husband gives her some amount every day as pocket money and household expenses. Since digital transactions have increased rapidly these days, most people prefer to transfer money to the account instead of giving cash. If you also transfer money to your wife’s account every month, then definitely check once where your wife is using that money because the Income Tax Department keeps an eye on your every move. In such a situation, the way your wife spends can also make you liable for income tax. Understand how?
Taking household expenses does not make your wife liable for tax
If you put money in your wife’s account every month for household expenses or give her money as pocket money or as a gift, then your wife does not have to pay income tax. Under the Income Tax Act, apart from income, if you give money to your wife as a gift, then it will be considered as your income and according to the tax slab, the tax liability on it will also be yours because spouses are covered in the category of relatives. In such a situation, no tax is levied on such gift transactions.
Tax liability arises in these situations
If you give money to your wife every month and she invests this money in SIP or any other scheme, then also she will not have to pay tax on it. The income from this will be added to the husband’s income and the husband will be responsible for paying income tax as per the tax slab. Due to this income, the wife is not required to file Income Tax Return (ITR File).
But if the wife reinvests the income from the investment, then the income from it will be considered as the wife’s income and the wife will be liable for income tax as per the tax slab. In simple words, once the income earned from the investment is reinvested, the income generated will be calculated and added to the wife’s income on a year-to-year basis. If income tax is payable on it as per the tax slab, then the wife will have to pay it. In such a situation, it is better to file ITR on earning any kind of income.
