My wife has received Rs.30 lakhs from her Mother's Will, we used that Money to pay our Personal and Business loans and Some amount we Invested In Mutual funds. what taxes would be applicable How much Tax we need to pay and When should we file a return

Ans: Since you have inherited the assets of your spouse as a legal heir, you need to pay tax on any income from the assets of your spouse after her demise. However, you don’t need to pay any tax on transfer of assets to your name, as there is no estate duty currently.

Only the interest/returns earned or the capital gains when you exit capital assets would have to be added in your return.

If your annual income is more than Rs.50 Lakhs, you need to disclose all the assets owned by you (incl. inherited assets) in the ITR.

Ans: 01. Income Tax is not payable on Gift from Father. This is Gift & not income of your wife.
02. She can spend this money in any way she likes, may be investment in MFs.
Most welcome for any further clarifications. Thanks.

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