Can you save tax by transferring to Spouse's account? Housewife's tax implications
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- Опубликовано: 14 окт 2024
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Clubbing of Income Under Indian Tax Laws
Clubbing of Income refers to the inclusion of another person's income in the taxpayer's total income for tax computation purposes. This concept is aimed at preventing tax evasion by taxpayers who might otherwise transfer their income or assets to others, typically family members, to reduce their tax liability.
The provisions governing clubbing of income are outlined in Sections 60 to 64 of the Income Tax Act, 1961. Here’s an overview:
1. Transfer of Income without Transfer of Assets (Section 60)
If a person transfers income from an asset to another person without transferring the ownership of the asset, the income from such an asset is taxed in the hands of the transferor.
Example: If Mr. A owns a property and transfers the rental income to his spouse without transferring the property itself, the rental income will still be taxed in Mr. A's hands.
2. Revocable Transfer of Assets (Section 61)
If a person transfers an asset under a revocable arrangement, the income from such an asset will be taxed in the hands of the transferor.
A revocable transfer is one where the transferor retains the right to reclaim the asset or income.
Example: Mr. A transfers a property to his son but retains the right to revoke the transfer. In such a case, the income from the property is taxed in Mr. A's hands.
3. Income of Spouse (Section 64(1)(ii))
If an individual’s spouse earns income from an entity where the individual has substantial interest, and the spouse does not possess technical or professional qualifications, the income is clubbed with the income of the individual.
Substantial interest typically means holding at least 20% of the equity shares or profits in the entity.
Example: Mrs. A works in a company where Mr. A has a 30% shareholding. If Mrs. A has no technical or professional qualification for the job, her salary will be clubbed with Mr. A’s income.
4. Income from Assets Transferred to Spouse (Section 64(1)(iv))
Income from assets transferred directly or indirectly to the spouse without adequate consideration is clubbed with the income of the transferor, except where the asset is transferred under an agreement to live apart.
Example: If Mr. A gifts a house to Mrs. A, the rental income from the house will be taxed in Mr. A’s hands.
5. Income from Assets Transferred to Son’s Wife (Section 64(1)(vi))
If an individual transfers assets to their son's wife without adequate consideration, the income from such assets is clubbed with the income of the transferor.
Example: Mr. A gifts shares to his daughter-in-law. The dividend income from these shares will be taxed in Mr. A’s hands.
6. Income of Minor Child (Section 64(1A))
The income of a minor child is clubbed with the income of the parent whose total income (excluding the child’s income) is greater.
There are certain exceptions where the child’s income is not clubbed, such as income earned by a minor from manual work, or from an activity involving the minor’s talent, or income of a minor child suffering from a disability as specified under Section 80U.
The parent can claim an exemption of up to ₹1,500 per child per year on the income that is clubbed.
7. Implications of Clubbing of Income
Clubbing can lead to a higher tax liability since the income is added to the transferor’s total income.
The clubbed income is taxed at the transferor's applicable slab rate, which might be higher than that of the recipient.
8. Prevention of Misuse
The provisions are designed to prevent misuse, such as transferring assets or income to relatives in lower tax brackets to reduce the overall tax burden.
The tax authorities are vigilant in ensuring that these rules are not circumvented through artificial transactions.
Conclusion
The concept of clubbing of income plays a significant role in ensuring that tax liabilities are not reduced unfairly through the transfer of assets or income. It is important for taxpayers to understand these provisions to comply with tax laws and avoid penalties or additional taxes. Proper tax planning and consultation with a tax professional can help manage these aspects effectively.
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Can you save tax by transferring to Wife's account?
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What if I gift all my demat account holdings to my wife account, will it be also taxed in my account
Bro you missed one important and critical information used to save tax using wife account in a legally acceptable way!!!
Return on investment amount which is already clubbed, is taxed in wife account.... definitely this way you can save lot of taxes!!!
For eg, if I invest 1 core in my wife account in FD and that gives 1 lakh per month which is taxed in my account and I reinvest that 1 lakh in my wife account, the return generated by this 1 lakh is taxed in my wife account only, this is legally right!!!
Pls explain, if the wife pledges her jewel and invests the money in the share market still it will be considered as clubbing ?
ஒரு ஸ்டாக் வாங்கி விக்கும் போது Tax அந்தந்த app எடுத்துக்குவாங்கலா இல்ல நம்ம தான் தனியா கட்டணுமா சொல்லுங்க
@@vasanthkumar9565 only charges will be deducted Tax you have to pay while filling ITR
India is not for middle class... That's it... Shame on govt taxation policy... If I earn ₹100..₹48 direct & Indirectly goes to govt and again they collected tax from us....
Un available nee uruttu
come on bro.. if we don't pay taxes, then who will pay for freebies..
How much you are earning bro ? If paying taxes is unfair, do you think life is fair for the crores of working class people? Stop whining about taxes. Be happy that you are in the position to pay taxes.
@@VmlucyBDaGV2aQBelive you are not paying higher taxes. People in higher tax bracket and risking money would know. We are paying tax rates of Canada and Netherlands for services much worse when compared. Wealthy individuals are leaving country which is not good for the country.
@@Userpvr143Ohh Apo freebee ila state la zero tax ahh?
Itha mattika bro 🤡
Yes Brother... Tax katta vendaam nu ninaichen
Apram thaan ithu therinjuthu... Now paid Tax for Both mine and Wife.... But worst thing is CA Charges. Around 10,000 (Together)
It is only for if you transferring bulk amount to wife ... And that also more than 10 lakhs...
People's must have to pay tax compulsory but politician can loot crores and crores but government won't cares....
Enna koduma sir ithu....
அதான் ங்க கார்பொரேட் govt
Adhani, Ambhani, Modi & Shah disproportionate growth in their businesses & heavy write-offs! Manipulation by SEBI top officials.. Worst FM with worst policies.. Corruption from low to d highest levels.. All these are the reason why common man suffers! Wen d top leader leads well everything else will fall perfectly in place & lead to our country's growth!
The real problem will start when the spouse apply for divorce
😂😂
Ultimate
😂😂😂
Same thought
Tax increase going towards people's Protest ku path ah varapoguthu future la same like jallikattu
In usa capital gain tax is increased to 44%.....
I'm ready for the protest 🪧
Can't we show it as salary for household works?
as of now, in India I don't think government is tracking such loopholes.
For example, many people who have rental income declare that income under their non-working partner's name and yet many haven't faced any issues till now.
Maybe in future it might cause issue but presently it doesn't seem so
Correction on your comments, if 0 income person receives profit of rupees 4.25L(LTCG) from investment then he/she needs to pay 12.5% of LTCG tax for 3L after 1.25L exemption since capital gain taxes are flat can’t include an income tax exemption of rupees 3L(as per new regime)… no matter about income tax slab
Is it applicable to salaried individuals?
How about tax rebate section 87 A
@@arrshath We cannot claim a rebate under section 87A for LTCG from stocks and mutual fund. However, we can claim the 87A rebate for LTCG from other assets like real estate, unlisted shares, etc
@@ravivarmamurugan6210 Yes it is applicable for every individuals
Yes, you are right.boosan, please correct it
If money is transferred to Parents or Siblings or Relatives or Friends, then same tax rule applies?
How is this situation handled?
It's common that many people transfer money between each other based on their situation and needs and return back money in future. It's totally impractical to apply tax laws for money sent to others.
Ur right, he confused all without any proper documents.
Tq bro,
Romba nala intha video va thaan thedittu irunden....
Need a video regarding HUF...... THANKS
I am a tax professional. We will help our client by showing husband gifted money to his wife n then she invested. No clubbing happens here
How to prove if you actually gifted?
Thanks bro for your explanation ❤. This question was poping up in my mind for few weeks and got answered 🎉
example:
give 50k salary to your wife.
prefer neft transaction, mention description as Salary or similar.
file ITR for her regularly.
invest 20k, spent 30k for needs/wants.
Hi bro,
Please extend this video for following scenarios?
- what if spouse also working person but less income, can we invest in their name?
- what about investing in parent names and sibling names?
Also if property is on both husband and wife's name, can the rent be collected by wife as she is not working.
I give monthly expenses to my wife in the name of salary to her. In that case the income that she earns by saving need not be taxed as she is not a working woman.
Thanks Boosan... Please make a video like this for beginners.
What about giving to retired parents with no income ?
I think mother/father this clubbing does not apply
How do they know who is my wife 😂😂😂😂
Good information. Thanks for your effort
Good information... How about gifting stocks to spouse? Same taxation?
Thank you boosan bro
Your video is always some thing different and very useful
🙏🙏👌
If you're a family man then you can get a HUF PAN to reduce your taxes
Bro if i transfer into children account(above 20yrs old)and children investing in stock or mutual fund they making profit means whom should pay the tax
Parents.. Better give in cash and ask him to deposit in the bank. nominal amount can be shown as salary by doing petty jobs..
Above 18 years...clubbing provisons does not apply
Nice info bro. Will there be a tax if i gift stocks to my partner?
Very informative sir. I have one doubt. If I withdraw full money from sip which is around 10yrs period. Is that full amount comes under LTCG or last one year they calculate as STCG.
Only Last one year SIP amount will come under STCG
This is really shocking. More then 15 lakhs only, we have to pay 30% tax. If this is the case, every middle class people will try to split the income and reduce the tax. But Indian doesn't worry about this. But this is the corporate goverment and that too for Adani and ambani...
If wife is a joint owner of home then husband can claim tax exemption on rental income..there is a declaration form for it
Anna u r videos are very eye opening... I have a doubt on compounding... How does my money gets compounded by investing in SIP... is there any way to talk to u..
My Mother Bought 48,000 NAV at 15
And 8341 Nav at 93
In 2024 She Tranfered 44,000 Nav And 8000
My New NAV is 44,000 At 25 Ruppes
And New NAV is 8000 At 196 Rupees
Now All dividends TDS Can Be Claimed And Used by Me
🧐 elaborate for the layman like me pls 😅
You are correct as a non-working woman, if working women are also getting a salary then this tax is applicable or another way is here... Please explain for Working women also with low salary credited in account
boosan nanba neenga always rock brother puthusa content eduthu kudukareenga pls ennods previous comment mudinja replay pannunga thanks
@finance.boosan 1:52 I doubt this total 4.25L tax exemption/year part, we need to understand Slab rate vs flat rate tax system….because 3Lac exemption can’t be clubbed into Capital Gain income because CG income has flat tax rate system with only 1.25L exemption/year (only applicable for LTCG) and there is no exemption for STCG so we need to pay STCG flat tax rate even you made 1 rupee of income as long as you aren’t registered your trade as business ….so 3Lac income exemption is only applicable for other than CG income Ex: Salary/Interest/FD/RD/Dividend/etc…
Yes, you are right. Salary income can not be clubbed with CG.
Boosan sir I'm still confusion in direct plan and regular plan in mutual fund.
Could you please explain these execpt expenses ratio
What are the advantage and disadvantages except expens ratio.
I'm waiting for your valuable response
Sir. Is Income tax different from capital gain tax or both are combined when file the ITR
Hi Brother... Very good information. Thanks.
BTW, I am a NRI and transferring amount to my parents join account and doing investment with my father account as I had some difficulty while opening the NRI trading account.
Will it be a problem? So far I have invested around 35 lakhs.
Vanakkam 🙏
Thank you so much.
Very useful information 🤝
The government doesn't have a proper way to track the money sent to my spouse's account. Things which are in the tax rule book are complicated and not practical
direct ah partner account'ku amount transfer pannaama namma account'la iruntha cash withdraw pannittu, partner account'la deposit pannittu use panna mudiyatha bro..
Thanks for this video boosan, just i planned to invest money via my spouse 😂
Is it true that NRI don’t need to pay any tax including LTCG if my capital gain for the year is less than 4.25L and I have no other income? Usually the income tax website shows the LTCG due in this scenario and I paid past few years.
I hope the same rules applicable while investing with kids account???
Can you explain about stoploss ?
Withdraw amount from Bank as cash, then deposit to Wife's account. Does that work?
100% 🎉
@ Boosan - if i reinvest the profit will it comd under Shot term Tax - clarify
How does it is compared to developed nations in similar situations
In a financial year , how much can the partner invest ? Tax free for 3 lakhs ?
Do vedio on loose RI filling and it's benefits
If transfers to the mother account and do the investment?
Does this apply between wife and husband only or father and son ?
Can you relate this with huf pan ? Does that too attract taxes if one member earns and invest with huf account?
Put video on LIC sir or do the comparison with Lic and sip
Apo monthly 1000rs maari sip panna spouse name la than tax varum. Right?
Its a small amount. Considered as spouse saved this amount and invested..
what will be condition if wife is working and her tax limit is below exemption.
Income + Capital Gains = Total Taxable income
Thank you. What if the husband is an NRI and wife is in India and Demat account is in wife's name?
Boosan.. as Anand sir told SGB is gonna be discontinued 😮😮😮😮😮... Your comments on that.. can you put a video on that.. if SGB in future doesn't exist then in wht form we can invest in gold for long term as a investment
Sri if we keep on sip then when i will get the money this is my biggest doubt plz clarity me
2:13 If my taxable income is 10LPA and K transfer 3L to my wife and choose new regime, I don't need to pay any tax?
Not correct. In India, if you transfer money to anyone and they on their own invest and make profit. it is taxed only as per their tax rates. Please get this checked. So, investing through a non working person in family will reduce tax, if profits are earned.
But income is linked in PAN know? All the investment stocks mutual fundswill be linked through wife's PAN card know? How will they track?
If a spouse had given money to their husband in past during some tough financial situation , and Husband repays it back after 10 0r 20 years as a gift to her. How is this fair to apply tax here ? Husband is returning the money back to spouse after his financial situation got better .
The tax rules between family members seems so illogical and confusing 😇
How do they identify that I transfer to my wife account? If I have not added her as Nominee anywhere
Please post a video on NRI taxation on mutual funds. Also, TDS on NRI mutual funds. I have been debited TDS for my PPFAS Flexi Cap Growth MF. This is a growth reinvestment option, not a dividend. I didn't redeem, but it says it's TDS. So it's confusing. Please post videos on NRI taxation on MF investments. Thabk you.
Bro share ragave 3rd party ku transfer panna kandu pidipangalaa...?
If we give house keeping expense
Bro what about money gn by parent to son/daughter as gift and if they invest n make money?(considering them as unemployed)
how about NRI sending money to his spouse and she investing in indian capital markets
how the taxation works ?
Bro oru doubt if we already paid capital gain tax after we got the amount in your account,should we also pay income tax again according to our slab
Bro naan zerodha la oru stock ah yesterday buy panni today holdings la irukumbothu sell panitan... position la sold holding la kaatuthu...naan sell panna amount eppo credit aagum plz sollunga...plz anyone answer me
06:12, புதுசா தான் இருக்கு. ஆனால் குழப்பமாவும் இருக்கு....
Can an nri transfer money to their parents and invest/trade in their parents account?
Adhani, Ambhani, Modi & Shah ssss disproportionate growth in their businesses & heavy write-offs! Manipulation by SEBI top officials.. Worst FM with worst policies.. Corruption from low to d highest levels.. All these are the reason why common man suffers! Wen d top leader leads well everything else will fall perfectly in place & lead to our country's growth!
My wife received 15 lacs from her brother as part of family settlement of their father's property which she invested in bank FD. Nothing to do with me. In this case will clubbing provision attract?Do I have to add wife's interest income with mine and pay tax? The amount was transferred directly by wifes brother to her account.
Atm la eduthutu
Cash deposit panita enna agum
நடுவுல இந்த கெசிக் வந்தா 😅.... Loopholes க்கே loophole
Tax on income, it will come under spends so it is your income and again you will be taxed for it.
You are correct, husband can give physical money to wife , then she can deposit and start trading
Why not have joint filing to avoid this loophole?
brother for example 10Laks na friend ku transfer pantran avanga investment la 10Laks profit iruku so tax na pay panunuma antha 10Laks ku
brother
Suppose bank directly deposit pana intha case discuss panuga bro....APA athu avanga own money thana consider agum
Please tell about son to parents, and vice versa scenario
Yes, how about transferring to parents bro
Yes, I believe son to parents is taxable under parents ITR
To the best of my knowledge, the clubbing of income tax provisions does not apply when you transfer money to your parents, and they earn income or gains from those funds in India. The income generated from such transfers is taxable in your parents' hands, depending on their individual tax situations.
However, if the transfer is made with the intent to evade taxes or is structured to obscure the true nature of the transaction, the tax authorities may investigate it. Under normal and genuine circumstances, though, clubbing provisions are not applicable.
@@finance.boosan Thank you bro. And guys don't take this as professional advice and it is just for educational purposes only
@@finance.boosanwhat if the transaction happened offline like without transferring the amount directly from bank to bank
Well informed 👏
Bro in case - if women earn through agriculture and she invest stocks or MF then can she take exemption for 4:25 lakh????
Agri income are 100% exempt..
good question, please reply
வங்கியில் இருந்து பணத்தைப் பணமாக எடுத்து, பிறகு மனைவியின் கணக்கில் டெபாசிட் செய்தால். அது வேலை செய்யுமா?
This is slightly non-traceable. And this is what he means not all financial transactions are tracked and clubbed at the moment. But if for some reason, ITD decides to question your wife for the source of funds, then you will have to explain everything .
Can someone clarify my doubt ?
I am gonna start investing
But for tht I need demat acc
Do i have to visit bank to open a demat acc or zerodha, grow app la log in pannum pothu create aagiruma?
Also bank acc oda pan link mandatory for this?
Demat account will be created once you create an account with any of the stock broker like zerodha, grow or angel one
As per income tax department it is mandatory to link pan and bank account, however if you deposit more than 50k or if you're going to open an fixed deposit or such things you'll be directed by bank itself to link it, so it's better to link since you're starting your investment journey
Hiiii bro
What is Net settlement for Equity with settlement number in Zerodha?
They have deducted my money for this.....
Ooru doubt bro... Short term gain business incomela kamiklama... When we r geting salary income.
Nippon mutual fund la 1 lakh lumpsum podalama sir
I think stcg and ltcg doesnt come under slab
I have one doubt. If i transfer my money to my spouce as a gift andh she invested and gain some amount . How do the government can tax me . Because we 2 members have different pan card right. Give me a solution .
Marriage Registration - Aadhaar card will be linked to both PAN Card
This is one of the craziest rule i am seeing, so if my wife gets a gift for her birthday, anniversary from her relatives then the investment returns should be taxed to the relative? If not so my relatives can gift her and she can invest on it but I can't do the same, this so confusing
If i don't transfer the amount feom my account and my spouse deposit money from other source like her parents. In this conditions how does this rule works bro
What if i sold stock within short term and profit is again reinvested without withdrawing from trading account
How about a transfer of funds via irrevocable gift deed to Spouse?
Bro i am investing for long term for certain goal .For example 10 year but what to do if at the end of 10 year the market value is falling. Should i wait for market to recover or should i withdraw money for my need which one will be best to do.
It's better to have a withdrawal strategy, such as gradually moving a portion of your investments into more stable options (like bonds or cash) as you approach your goal, to reduce the risk of needing to sell during a market downturn.
@@finance.boosan Need to learn more about it .if possible put a shorts about it Thanks in advance 🫡
You can save tax but you can't save money from spouse. 😂😂😂😂😂😂
Wat if I withdraw cash i.e.100000/- year and deposited into her account manualy and then she starts investment, will that work?
Abroad working salary direct ta wife india ac ku send panrom. Then atha wife invest pani profit panina tax yaru name la fille pannanum. ?
This has been a practice ever since and not to deny the fact this law is also there for a long time. Off late all these Fin Influencers for the sake of content keep talking a lot about it, just for the government to realise another loop hole and fix it for our bad.
There is no good about doing these videos.
What if I withdraw 10L from my account and keep it somewhere and deposit in my wife's account after 1 month. Will it still be considered my money
What about father gives money to son is it taxable
Bro account la transfer panama , kaila eduthu atha avanagh account la pottu mf pana ...
good question, hopefully Boosan will help to answer this. Thanks