Tax laws specific to housewives

Tax laws specific to housewives

Will you file a return of income?

One by six is a criterion that needs to be met when you file your returns. In simpler terms, if you fulfill any one of the six criteria, you will have to file a return of income tax even though your income maybe below the tax-free limit of Rs 1 lakh. At the moment the six criteria are mobile phones, travel abroad, credit card, car, immoveable property, and club membership.

In this Budget, the finance minister has replaced mobile phones with electricity bill exceeding Rs 50,000 per annum. So if you had been filing tax returns because you own a cell phone, even though your annual income is below Rs 1 lakh, you need not do so in the future. As against that, if your electricity bill exceeds Rs 50,000 every year, you will be brought under the net of filing returns.

Will you pay tax on money that your husband gives you to run the household?

No. If your husband gives you money to run the household, it will not be taxed as income. But if you manage to save some of that money and make investments out of that, the income from those investments will be taxed in your hands.

However, a particular section of the income tax act deals with clubbing of income of two or more people. The main objective of the section is to ensure that no part of a person's income is diverted to another person with an intention to evade tax.

So, according to this section, if your husband gives you a gift in the form of cash or kind, the income from it would be taxed in his hand. As an example, if your husband opens a fixed deposit in your name, any interest on that would be taxed in the hands of your husband. But if you pay him a certain sum for those shares, the income from those shares would be taxed in your hands.

Above is not the only arrangement that attracts tax in the hands of the husband. There are several other situations. Suppose your husband gifts you a house and subsequently you give the house on rent. The rental income from this house would be charged to tax in the hands of your husband. Even if you sell the house property and make a gain from the sale, the capital gain that arises would be taxed in the hands of your husband.