Hello, Out of my retirement benefits, I had invested Rs.15 lakhs in my wife's name in LIC Jeevan Akshay for monthly yield. Does this monthly yield to be accounted by me as she is not a tax payer (homemaker)? Kindly advice me

Ans: If taxpayer directly or indirectly transfers an asset to spouse for inadequate consideration than Income from such asset is clubbed in the hands of the transferor. Transferor (taxpayer) should show such income in Schedule SPI of Income Tax Return filed by such tax payer in whose hands income is clubbed. No need to show said income in the income tax return of spouse. 

Ans: In case spouse is earning income out of money transferred by husband without consideration, income will be clubbed in the hands of husband. Transferor (husband) should show such income in Schedule SPI of Income Tax Return filed by such tax payer in whose hands income is clubbed.

Ans: In the scenario you described, where your wife's PPF has matured, and the proceeds have been reinvested in the Senior Citizen Savings Scheme (SCSS) in her name, the interest earned from the SCSS would be taxable in her hands.

Since the SCSS is held in your wife's name, any interest earned on the investment would be considered her income for tax purposes. As per the Income Tax Act, the interest earned from SCSS is fully taxable, and it is added to your wife's total income for the financial year in which it is received.

Therefore, when filing taxes, your wife would need to include the interest earned from the SCSS in her income tax return and pay tax on it as per the applicable tax slab rates.

It's essential to keep accurate records of the interest earned from the SCSS and ensure that it is reported correctly in your wife's income tax return to comply with tax regulations. If you have any further questions or need clarification, it's advisable to consult with a tax advisor or financial expert.

Ans: Understanding Tax Implications for Gifts and Investments
1. No Tax on Money Given to Your Wife

Money transferred to your wife for household expenses or gifts is not taxable.
Gifts given to your wife are exempt under Section 56(2) of the Income Tax Act if given without consideration.
2. Clubbing of Income Rules

Income earned from the money you gave to your wife could be taxable under your name.
As per Section 64(1)(iv) of the Income Tax Act, any income earned by your wife from assets funded by you will be clubbed with your income.
3. Taxation on Income from Investments

Dividend Income or Interest Income: If your wife earns interest or dividends from the investments made using your funds, this income will be added to your taxable income.
Capital Gains from Investments: Income from the sale of mutual funds or equities (capital gains) is taxed in her name since it's her investment decision. It will not be clubbed with your income.
4. Money Received from Son

Any money your wife receives from her son is exempt under the Income Tax Act as it is considered a gift from a relative.
Income generated from such funds (e.g., interest, dividends) will be taxed in her hands.
5. Filing of Income Tax Returns by Your Wife

Filing returns is a good practice, even if her income is below the taxable threshold.
This ensures her financial independence and tracks her income and investments systematically.
What Should You Do?
1. Maintain Proper Documentation

Keep records of the money transferred to your wife. This helps establish the source of funds.
Document the funds received by your wife from her son.
2. Separate Accounts for Clarity

Encourage your wife to maintain a separate bank account for her investments.
This will ensure transparency and clarity in case of future tax assessments.
3. Monitor Clubbing Provisions

Regularly review investment income to check if it’s liable for clubbing.
Capital gains are not clubbed, so your wife can continue her equity and mutual fund investments.
4. Seek Professional Guidance

Consult a Certified Financial Planner or a Chartered Accountant.
They can help you structure investments and income to minimise tax liabilities.
Final Insights
There is no direct tax liability on you for money gifted to your wife. However, income from such funds may get clubbed with your income as per tax laws. By planning investments and maintaining proper records, you can manage tax compliance efficiently.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment