Can you save tax by transferring money to wife`s account, here`s what experts say

Tax experts explain if you will have to pay taxes for the money deposited in your wife`s account as monthly household expenses.

New Delhi: Since online transactions have become a norm, many people have concerns that the money deposited in wife's account every month as household expenses will it be taxable. 

According to tax experts, the money deposited in wife's account for household expenses will be considered as husband's income and the wife will not have to pay any tax on this. But in some unusual circumstances it can be shown as wife's income in such a scenario, the amount becomes taxable.

If she uses the money for investment purposes repeatedly and makes an income out of it, then tax will be levied on the income generated. 

Tax to be paid under these circumstances

If the wife is investing the amount deposited in her account every month through SIP, they do not need to file an Income Tax Return (ITR File) on this money, nor will they have to pay any tax. However, if the income earned by investing this money will be earned by investing again, then the wife will have to pay income tax.

What does IT law say?

According to the income tax law, if you give some money, which is not part of your income, as gift to your wife then you will not get any kind of tax rebate on it. According to the law, it will be considered your own income and so the tax liability will be yours too.