Income Tax Rules on Cash Transactions Between Family Members
Tax experts clarify that if a husband gives money to his wife for household expenses or as a gift, this amount is considered the husband’s income. The wife, in this scenario, is not liable for income tax, and she will not get a notice from the Income Tax Department. But, if the wife invests this money repeatedly and earns an income from these investments, the resulting income is taxable in her name. The income tax on such investment returns will be calculated annually, and she will need to pay the applicable taxes.