Sushant Singh (Private Service) 24 January 2017

Does my wife have taxable income ?

Can experts guide me with regards to taxation :

1) I am an NRE and I send money every month to my wife and child.
I send wife 8000/- and she invests this in equity mutual funds
I send child 12500/- and the same is invested in equity mutual fund on behalf of minor child.

Child is minor and my wife PAN card is quoted on transactions.

2) I also put 1.5 lacs per year in minor childs ppf account, which again has my wife as guardian and her PAN card is used for the same.

My wife has rental income of 168000/- per year.

Please advice me what is my wife tax liabilty.

My thinking is that since gifted money is invested in equity MF and ELSS, and PPF accounts respectively, which are tax free instruments there should be no issues with tax and my wife falls below the min exemption limit of 2.5 lacs and is not in the tax bracket.

However, experts please guide.

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3 Replies

sai narayana 25 January 2017

As you are already paying tax and also her standalone income is below the standard deduction, the tax payable is NIL.

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GANDHI MOHAN BHARATI (Pensioner) 25 January 2017

Gift to wife and child are not taxable. Any income out of the gifted amount in the hands of wife or child is to be clubbed with your income. If the income is tax free, you have show the income and exemption it in your ITR. Please do a Google check on the provisions of clubbing of income in the Income Tax India.

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Sushant Singh (Private Service) 25 January 2017

Thank you both Sai Narayana & Bharati Sir for your replies.

Me being an NRE have no income in India, except nominal NRE deposits, so I have not filed returns in India. From your replies can I conclude that my wife does not come under taxation since her income from rent is 168000/- annually. She can continue to invest the money I give her in her and childs name in equity mutual funds.

Total investment of my wife is 20k in equity MF per month and 12.5k monthly in childs PPF account. Is that too much considering her income is only 168000/- annually and the rest of the funds (1.35L) are gifted by me (NRE husband) during the year.