Yes, it may sound strange but you can save taxes by transferring money to your wife’s account! Here’s how! When you transfer some amount in your wife’s account for meeting her personal expenses, etc and she uses the same for investing in any assets, investments or fixed deposits, the income from such assets or investments is chargeable to tax in your hands. For instance, if you buy a house in your wife’s name but you are the sole contributor for purchasing of that house, then rental income , if any, from such house, will not be chargeable to tax in your wife’s hands, but it will be clubbed in your hands . Also, if there are capital losses, those will also get clubbed with your income as per clubbing provisions.
There can be a case, where you have actually loaned an amount to your spouse. If your are charging proper interest and showing the same as income in your income tax return then, then income earned by your wife will not be clubbed with your income.
In case, your spouse is a homemaker and not earning any income and you are providing her some amount every month for meeting the personal and household expenses, in that case as well, such income will not be chargeable to tax in your wife’s hands as her income does not exceed maximum amount not chargeable to tax. However, if she saves some amount from the money gifted by you for personal expenses and deposits the same in bank and earns interest on the same , then such interest income will be clubbed with your income.
Therefore, next time, you gift anything or any amount to your beloved, take care of the tax implications and then gift accordingly.Hope this write-up is helpful. In case, you have any query regarding clubbing provisions, just raise a ticket on myitreturn.com.