Q. My wife is a homemaker. She has ₹6 lakhs in FDs and a few recurring deposits in her name. Should she file income-tax returns?
It is mandatory to file income tax returns when one has a gross total income of ₹2,50,000 or more. If the recurring deposits along with the FDs in her name are not substantial enough to fetch an interest income of ₹2,50,000 per annum, she need not file her returns.
For senior citizens, of age 60 years and above, the limit is ₹3,00,000 per annum.
However, we must understand clubbing provisions under income-tax. If a homemaker has no income of her own and the money she uses is given by her husband, for tax purposes, the income from her investments made will be clubbed with the income of the husband.
If the income thus clubbed gets reinvested and earns a return, that is considered as the wife’s income. She will be liable to file her taxes if this income exceeds ₹2.5 lakhs.
Let us consider an example. The husband gifts ₹25 lakhs to his wife and she invests it in her name. Assuming 8% return, she will get ₹2 lakhs on this investment. Since she has no income of her own, these 2 lakhs get added to her husband’s income. He will be required to pay tax on this as per his income tax bracket.
Let us assume she invests this ₹2 lakh and gets 8% return, that is ₹16,000. This is considered her income. However, since this is below ₹2.5 lakhs, she is not liable to file tax returns.
While filing a return is not mandatory, if the person falls below the taxable limit, there are a lot of benefits in filing a nil return. It will come handy in circumstances where the homemaker wants to start her own business venture and needs to apply for a loan.
This will also help when she applies for a visa to travel abroad. Even though no tax is payable, some service providers may erroneously deduct tax at source. The only way to claim this wrong deduction as a deduction will be by filing regular returns.
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