Questions Clubbing of income

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Harshottam Dhakad

Category : Clubbing..,

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January 19, 2020 3:49 am

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Clubbing of income

Hello Amlan Sir,

I watched your video on youtube and really appreciate your effort for sharing the knowledge.

I would also greatly appreciate if you could provide your expert advice in my case. I am an IT professional earning a yearly income more than 10L. Starting in this FY 19-20, I had transferred...

Amlan Dutta

Amlan Dutta

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Amlan Dutta

The income in stock market from wife shall be clubbed to you only. You have correctly clubbed your wife income while filing your ITR. Like you stated already , she will file nil return only.

Reason : Section 64 of the Income ...

January 21, 2020

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milap chand

Category : Stocks (.., Clubbing..,

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July 20, 2019 6:52 pm

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hello sir,i am govt.salaried employee,my wife is house wife.i transferred my salary money around 600000 rs. in her account,and in 2018 yr. buy shares and 6000 rs monthly mutual funds investment threw my wife's account,around 370000 rs.shares i sell in year 2018 and got profit 39000 rs.and got divide...

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Amlan Dutta

I will not be able to guide you on how to fill up ITR ...here clubbing provisions will get attracted and the income from wife will get clubbed to your income under corresponding income heads

July 23, 2019

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Jitendra B

Do clubbing provisions get attracted even if wife will invest that amount in equities / mutual funds? Such capital gains will required to be added in husband's ITR?

July 24, 2019

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NAGARAJ

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April 7, 2019 1:21 pm

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Clubbing of income

Hi Amlan,

I have opened a bank account, and a Demat account in the name of my wife in the month of March 2019, who is a housewife, and transferred Rs. 4,00,000 from my bank account (This amount is credited in March 2019 to my account from closure of a 2 year house lease agreement).

Out of Rs. 4,00...

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Amlan Dutta

All income that is generated from equity and interest both shall be clubbed to your income ...better to close her account and create one in your name to avoid all these unnneccesary clubbing Many people to transfer assets to othe...

April 8, 2019

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Amlan Dutta

April 8, 2019

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Sunil Sahoo

Category : Clubbing..,

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December 20, 2018 11:30 pm

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Clubbing of income

How can clubbing be avoided in cases of gift to non working wife/spouse...can you guide further on this

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Amlan Dutta

Section 60 to 64 speak of clubbing of income
There are different ways where you can save on some of the taxes when incomes are clubbed.

a.) Interest on Interest:
In case you earn a lot of money while your Spouse has zero income, you can benefit from investments made in his/her name. The interest earned from the investment will be clubbed with your income and taxed accordingly. However, if your spouse re-invests the income and earns income from this investment, it will be taxed on him/her only as per respective tax brackets.

For instance, you have invested Rs.20 lakhs in equities in your spouse’s name and earn Rs.10 lakhs from that. The income from this investment will be clubbed with yours and taxed accordingly. However, if this Rs.10 lakhs is again invested by your spouse in equities and earns Rs.4 lakhs, the income this time will be taxed on him/her. So, assuming your wife doesn’t earn anything, this Rs.4 lakhs will put her in the 10% tax bracket with mandatory exemption up to Rs.2.5 lakhs. She will ultimately pay Rs.15,000 p.a. as income tax on the amount.

Now, if you had invested the Rs.20 lakhs in your name and reinvested the income of Rs.10 lakhs to make another Rs.4 lakhs, this amount will be taxed as per your tax bracket which is 30%. The amount of tax you pay is Rs.1.2 lakhs p.a. on this amount.

A point to note here is that if your spouse is in the 10% or 20% bracket, tax calculations will become complicated for you and you might not benefit from the investment also if your spouse is transferred to the 30% bracket with you if income from investments push her tax bracket. You should ideally approach this method only if your spouse or major child is not earning anything.

Loans to Spouse:
Another way is to give money as interest-free loans. This is lawful and provides you with tax exemptions on up to an extent on the loaned amount. Giving loans to dependents will benefit you more than giving gifts. A simple letter notifying the loan amount and signed by both parties is enough to save taxes in this case.

In cases where clubbing does happen , if the investment is in a exempt source i.e say investment is in a PF whose interest income is exempt , then clubbing wont effect since the clubbed income is exempt anyways

(Note for major son/daughter, clubbing doesn't happen...it only happens in the case of minor son , so if you are doing anything for a minor son , then ensure to invest in exempt sources in his name else the income shall get clubbed to higher income generating parent)

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December 20, 2018

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Amlan Dutta

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December 20, 2018

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