Income Tax Notice: You may receive I-T notice if you are giving cash to your spouse; Know these income tax rules to avoid penalty
As per Section 269SS, you can not give more than Rs 20,000 cash to your spouse, and as per Section 269T, if you need to repay cash of more than Rs 20,000 (borrowed from someone), it can be done only through banking channels.
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Most taxpayers think they can save taxes by transferring money to their spouse's account or giving them cash. However, there is a limit of giving cash to your wife else you might get an income tax notice. According to tax experts, if the husband gives money to his wife for household expenses or as a gift, then this amount will be considered as the husband's income and the wife will not have any tax responsibility on it.
As per Section 269SS, you can not give more than Rs 20,000 cash to your spouse, and as per Section 269T, if you need to repay cash of more than Rs 20,000 (borrowed from someone), it can be done only through banking channels.
How much amount you can give to your wife?
There is no limit for household expenses. The husband can give any amount to his wife for household expenses. This amount is not taxable, and is considered part of the husband's income.
What is the penalty provision?
If someone transacts more than Rs 20,000 in cash and is not in a husband-wife relationship, then the tax department can charge the same amount as a penalty. If a person violates this provision, he will be fined under section 271D.
What if you give money to your spouse as loan
If you transfer money to your spouse to meet their financial needs, this amount will be considered as a loan that needs to be returned with interest. If you are taking reasonable interest and showing this as a source of income, the income earned by your spouse may no be clubbed with your.
What happens if you give money for personal expenses
In this scenario, there are no income tax implications. However, any interest earned from a bank account may still be clubbed.
Ways to avoid tax notice
Do not make cash transactions of more than Rs 20,000.
Try using cheque or NEFT/RTGS
Enter the details of the wife's investment amount correctly in the tax return.
If the wife has purchased any property (property, FD), then ensure payment of tax on her income.
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