Income Tax News: Understanding the Tax Implications on Monthly Transfers and Gift Money; Check The Guide Here

Income Tax News: People's shopping habits have evolved throughout the nation over the years, but there have also been significant changes to the available payment methods. Online shopping and digital payments are becoming more and more popular. Most of the people in this situation transfer money to their wife's bank account on a monthly basis to cover household expenses.

Monthly Money Transfer and Income Tax Notice

The question now is, if you transfer money each month, will your wife be able to receive an Income Tax Notice? Whether you can claim a tax deduction by treating this money as gift money is also a significant question at this point. Your wife is exempt from income tax if you give her money each month to cover household expenses or as a gift on holidays like Diwali, Dhanteras, or other special occasions. is produced. The husband's income will be determined by both of these categories. There won't be any tax due on this for the wife. To put it simply, the wife won't be getting a notice from the Income Tax Department regarding this amount.

Taxable Income from Invested Capital

There will be taxable income on the income received from the invested capital, though, if the wife keeps investing this money and earning income from it. Stated differently, the wife's income will be determined by the annual calculation of her investment income, for which she will be responsible for paying taxes.

Legality of Giving Money as a Gift under Income Tax Act

The Income Tax Act states that it is lawful for you to give your wife money as a gift if it is not part of your income. You will not, however, be eligible for a tax exemption on this. If you give your wife money as a gift and it's not considered income under the Income Tax Act, it will be treated as your income. On this, you will also be liable for taxes. Spouses are actually included in the family category. There isn't any tax on these kinds of gift transactions.

Income Tax Return (ITR) Filing Requirement for the Wife

The wife does not need to file an income tax return (ITR file) for the money if she invests a portion of the money she receives from her husband each month in mutual funds (MF) through SIP. In addition, they won't be required to pay any taxes on it. The husband's taxable income will be increased by the income from this money's investments.

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