The last date of submission of Income Tax returns is almost here. It is common belief that transferring money into wife’s account for household expenses would help the husband save taxes.
The COVID-19 pandemic era has connected people to digital way of living to a large extent. Especially now the shopping of everyday items has become digital to a large extent.
People are also giving more importance to online for money transactions. In such a situation, if you are transferring money for house expenses to your wife’s bank account every month, then the question arises whether the wife will get Income Tax notice?
Tax experts believe that the wife does not become responsible for Income Tax when one is depositing money in wife’s account for household expenses every month. This transaction will be considered as husband’s income only.
The wife will not have to pay any tax on this. In simple language, the wife will not get any notice from the Income Tax Department for this amount. But if the wife invests this money repeatedly and gets income from it, then taxable income will be made on the income to be generated.
There are various other types of income that are exempt under various sections of the income tax act. There is a schedule called Exempt Income (EI) in the tax forms where you need to give details of exempt income.
Some of the incomes which are exempted from income tax, are receipts from statutory provident fund, public provident fund, superannuation funds, scholarship received for completing education and interest earned from postal savings accounts up to ₹3,500 in a financial year.
Exempt income of minor children which has to be clubbed in the income tax return of either of the parents also needs to be reported in the income tax return. Gifts received from close relatives such as husband and wife, father and son etc as defined by the tax department is tax exempt.