Do you know that the income of your dependent spouse is clubbed with your income during income tax filing? What are the various things you need to keep in mind while filing for income tax filing? Brief answers.
Edited transcripts
Udayan Ray: Welcome to FundooMoney web series on tax filing. We are discussing various aspects people need to keep in mind while filing for taxes. Now, “better half” is really the better half but the tax man doesn’t really spare the better half. So, what does a person do while filing for taxes if the better half has an income? We are referring to a case where your spouse is not working and is also making money from investments or some other sources. Or, you have gifted some money that has made money. How does one negotiate these aspects?
To help us understand and appreciate and give us some actionable information, we have with us eminent tax expert Swami Saran Sharma.
Welcome Swami! Taxman doesn’t spare the non-working spouse. Now, how does one deal with spouse’s income.
Swami Saran Sharma: Obviously, if the spouse is not working she will not have any income. But in case, she has an income, it could be out of accumulated savings—she could have been working in the past. There could be some earnings from it. Then, it is to be taxed in her own right. So, tax will have to be paid as applicable to her. But as it normally happens, husbands do transfer some money to their spouses. That amount keeps earning money in her name. In that case, the tax treatment is very clear. All the income is to be added to the income of the husband. It has to be clubbed as per the provisions of the Section 64 of the Income Tax Act.
Udayan Ray: So, if you have a non-working spouse and she ends up making some money, it actually gets added (to your income). So, again that truth about inevitability of taxes comes to the fore. Swami, what happens if the non-working spouse gets some kind of a gift from certain people like relatives?
Swami Saran Sharma: If the gift is from a person other than the husband i.e. 8 relatives which are named in the (Income Tax ) Act, mother, father, brothers, sisters and their spouses, uncle, aunts and all, then it becomes the capital of the person (spouse). When that capital is invested and earns money, it essentially remains the spouse’s income. It is taxed in her own right.
Udayan Ray: Okay, this will be really great information to have harmony at home and harmony with tax man. There’s lots more information waiting for you at our social media platforms and of course, our website www.fundoomoney.com.
