ravi (senior accountant) (507 Points)
29 December 2011Husband is working in dubai he drops funds in his NRE, if his wife in india withdraws such funds through NRO here in india Is that treated as transfer and gift. What is the taxability of such income in the hands of Wife here in india? Later after withdrawing such funds she invests in banks for interest (term deposits) is such interest income is liable to be clubbed in the hands of Husband and whether Husband is liable to file his return in india
CA Neil Ganatra
(Partner - Gautam Joshi & Co.)
(871 Points)
Replied 05 January 2012
Here if the money is used for routine household and such other expenses only then it will not be treated as transfer or gift. In case of deposit also, if it can be proved that transfer of money is to meet routine expense only and deposits are made out of savings done by wife from that transferred money then it will treated as deposit out of 'PIN Money'. In that case interest will not be clubbed. But if wife also earns something and whole transferred money is directly deposited in bank then interest shall be clubbed in the hands of husband.
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