Can You Save Tax By Transferring Money To Your Wife? Here’s What The Law Says

Many taxpayers explore different ways to minimise their tax burden, including transferring money to a spouse’s account. But is this method legitimate to save tax? And who is liable to pay tax on income earned from such transferred funds? While money or other assets gifted to a spouse are exempt in the spouse’s hands, they are still taxable in the hands of the person making the gift. Furthermore, the money generated by such a gift transfer is taxable in the hands of the transferor.

In this article, we are clearing all the doubts related to transferring money in wife’s account for saving tax.

Is the Transfer Itself Legal?

A husband can legally transfer any amount from his post-tax income to his wife’s bank account. Under the proviso to Section 56(2)(x) of the Income-tax Act, money receive