Income Tax Rules 2025: If you give cash to your wife and she uses this money for investment (such as fixed deposit, stock market or buying property) and earns income from it, then it will be necessary to pay tax on this income.
Income Tax Rules 2025: If you give money to your wife every month for expenses in cash or by bank transfer, then be careful. According to the Income Tax Rules, this money can be considered as part of your income and can cause a tax notice. Many people are unaware of this rule and can get into trouble later. Let us know what the Income Tax Law says about this and what you should do to avoid it.
You have to take care of some special rules of the Income Tax Law. Even though cash transactions between husband and wife are common, if you give cash or money to your wife, then in some situations an income tax notice can come.
Rules of Clubbing of Income
It is very important to follow Section 269SS and 269T under the rules of the Indian Income Tax Act. Generally, if the husband gives cash to his wife for household expenses or as a gift, then there is no tax liability on it. This amount is considered as the income of the husband and no tax is levied on the wife. But if the wife uses this money for investment (such as fixed deposit, stock market or buying property) and earns income from it, then it will be necessary to pay tax on this income. It can be added to the husband’s income under the “Clubbing of Income” rule, which can increase the tax liability.
What is Section 269SS and 269T
Cash transactions have been regulated through sections 269SS and 269T so that black money can be stopped. Section 269SS: Accepting cash in excess of ₹20,000 as loan, deposit, or advance payment is prohibited. If the husband gives his wife cash in excess of ₹20,000, it is mandatory to do so through banking channels (such as cheque, NEFT, RTGS). Section 269T: If the borrowed money of more than ₹20,000 is to be returned, it must also be done through banking channels. In the case of close relationships like husband and wife, there is no penalty for violating these sections, but it is important to maintain transparency.
What rules apply to money given to the wife?
For household expenses
The husband can give any amount to his wife for household expenses. There is no tax liability on this, and it is considered a part of the husband’s income.
For investment
If the wife makes any investment from the amount given by the husband, such as fixed deposit, stock market or buying property, then tax will have to be paid on the income generated from this. For example, if the wife’s investment generates an income of ₹1,00,000, it will be added to the husband’s income and taxed.
Rental income
If the money given to the wife is used to buy a property and it generates rent, this rent will be considered the wife’s income and tax will be levied on it.
Gift tax rules
If the husband gives money to his wife as a gift, it is not taxable. According to the Income Tax Act, husband and wife are classified as close relatives, and tax exemption is given on gifts.
Ways to avoid tax notice:
- Do not make cash transactions of more than ₹20,000.
- Use banking medium (cheque, NEFT, RTGS).
- The investments made by the wife and the income from it should be correctly recorded in the Income Tax Return (ITR).
- If the wife has made property, FD, or other investments, then pay tax on her income on time.
When can a tax notice come?
If there is no transparency in the cash transactions made between husband and wife, or the wife has not disclosed the income earned from that amount, then the Income Tax Department can issue a notice. Especially if the money has been used to save tax, then the Income Tax Department can take action.
Overall, there is no direct tax rule on cash transactions between husband and wife, but it is important to follow the provisions of the Income Tax Act. Transparency in cash transactions and keeping proper records is the easiest way to avoid a tax notice.
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