My wife is crazy about stock trading. The money came from me.Explanation of income tax rules

I have been married for 25 years. My wife is a housewife. She is B.Com. We have been trading stocks for the past 12 to 13 years. She hasn’t filed an ITR in the past because she hasn’t had taxable income in the last few years. However, during the 2020-21 fiscal year, her income exceeds the basic tax exemption limit and, as I understand, she must submit an ITR by December 31, 2021. The money to trade stocks was sometimes given by me. Is her income clubped with my income, or she can submit an ITR showing her total income as her income. Please show me around. Isn’t this enough to declare this income as her income, as she trades herself and is a graduate?

Answer: Due to the provisions of Indian tax law, gifts from one spouse to another are completely tax exempt in the hands of the recipient and are not taxed on both spouses. However, according to Article 64 of the Income Tax Act, the income generated by a spouse from an occasional gifted asset must match the income of the spouse who gave the gift. Club regulations apply as long as the marriage lasts. If the asset is converted to another format, the club’s rules will continue to apply within the value of the original gift. Please note that the club’s rules apply only to gifts of the original amount and not to income generated by further investment from such income. The money you give your wife from time to time was treated as a gift you made, and the income associated with the amount of such original gifts made at different times had to be included in your income from the beginning. .. Even if she is an educated woman and earns money by applying her knowledge and skills, the club’s rules apply. The time to revise the ITR before fiscal year 2019-20 has already passed, so we can’t do anything about past income right now.

However, it’s a good idea to start clubbing with your income related to the money you gave her. For the remaining income, she must submit her ITR if the remaining income still exceeds the basic tax exemption limit. I understand the difficulty of separating income between the income directly derived from the gift you give and the balanced income generated by investing the income already clubped. To make this allocation, divide your total income by the sum of all your gifts and the balance of her total capital minus each.

If the total amount invested represents the savings from the pin money you gave to run the household, the club’s rules do not apply and the total income can be viewed as her income. The amount of money that is treated as pin money, not a gift from the husband, needs to take into account various factors such as the husband’s income, the amount given by the husband as a household allowance, and reasonable monthly household expenses. caution. Don’t try to use it as a tax avoidance tool, and add the relevant part of her income to the club with your income on a logical and rational basis.

Balwant Jain is a tax and investment expert and can be contacted on and @jainbalwant on Twitter.

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My wife is crazy about stock trading. The money came from me.Explanation of income tax rules

Source link My wife is crazy about stock trading. The money came from me.Explanation of income tax rules

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