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Income tax query related to wife's salary

Dr. Jones (Director) (253 Points)

18 January 2013

I am the owner of a Private Limited Company.

My wife, who is B.E (Electrical), works part time in the company. She does computer graphic design work. She is quite good at design.

If I start giving salary to her, can that income to clubbed with my income?

Please let me know.

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4 Replies

Manika Venkata Siva Prasad (IPCC-student) (84 Points)
Replied 18 January 2013

If you are giving salary to your spouse for her technical and professional services, the income should not included/clubed to your account.

REMUNERATION FROM A CONCERN IN

WHICH SPOUSE HAS SUBSTANTIAL INTEREST [SEC

64 (1) (ii)]

Concern – Concern could be any form of business or professional concern. It

could be a sole proprietor, partnership, company, etc.

Substantial interest - An individual is deemed to have substantial interest, if he

/she (individually or along with his relatives) beneficially holds equity shares

carrying not less than 20 per cent voting power in the case of a company or is

entitled to not less than 20 percent of the profits in the case of a concern other

than a company at any time during the previous year.

If the following conditions are fulfilled this section becomes applicable.

• If spouse of an individual gets any salary, commission, fees etc

(remuneration) from a concern

• The individual has a substantial interest in such a concern

• The remuneration paid to the spouse is not due to technical or

professional knowledge of the spouse.

Then such salary, commission, fees, etc shall be considered as income of the

individual and not of the spouse.

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Manika Venkata Siva Prasad (IPCC-student) (84 Points)
Replied 18 January 2013

Correct me experts, if i am wrong

kavitha (studying final) (830 Points)
Replied 18 January 2013

Originally posted by : Manika Venkata Siva Prasad
	If you are giving salary to your spouse for her technical and professional services, the income should not included/clubed to your account. REMUNERATION FROM A CONCERN IN WHICH SPOUSE HAS SUBSTANTIAL INTEREST [SEC 64 (1) (ii)] Concern – Concern could be any form of business or professional concern. It could be a sole proprietor, partnership, company, etc. Substantial interest - An individual is deemed to have substantial interest, if he /she (individually or along with his relatives) beneficially holds equity shares carrying not less than 20 per cent voting power in the case of a company or is entitled to not less than 20 percent of the profits in the case of a concern other than a company at any time during the previous year. If the following conditions are fulfilled this section becomes applicable. • If spouse of an individual gets any salary, commission, fees etc (remuneration) from a concern • The individual has a substantial interest in such a concern • The remuneration paid to the spouse is not due to technical or professional knowledge of the spouse. Then such salary, commission, fees, etc shall be considered as income of the individual and not of the spouse.

agreed

CA Prashant Gupta (DGM (F & A)) (14068 Points)
Replied 19 January 2013

if the salary is according to her technical and professional knowledge and qualification, then there is no clubbing. it will be her salary.

i used according to because as she has interest so she can be paid much higher then others. so it is to be seen that remuneration is according to her qualification and experience. otherwise ITO can object