The financial potential is reflected in the fact that there will hardly be a woman who does not manage to get out of that monthly allowance. Some women have been known to save quite a large chunk over time; This money has really saved many families in times of crisis. And we have seen it in abundance in the recent pandemic situation. Women came to the rescue when spouses, or other earning members of the family, lost their jobs and sources of income.
What Income tax Housewife says about income:
Income tax laws provide for amalgamation of income, where the wife receives income from money gifted by her husband or father-in-law, as it is treated as non-application of her skills. The same rule applies if she is a partner in a partnership firm with her husband and receives salary or benefits without application of her skills. Clubbing applies where the wife does not have the necessary professional qualifications to earn that income and it derives from her husband’s skills. These provisions have existed since the inception of recent tax laws. The clubbing provision is intended to check tax evasion arising from the transfer of property and income to the spouse. The clubbing provisions also apply to property or income transferred to minor children from parents and father-in-law to daughter-in-law and also to property or income transferred to one’s HUF.
To understand clubbing better, let us take an example of a gift given by a husband to his wife, say Rs 5 lakh, which she invests in a bank fixed deposit and returns 6% (Rs 30,000) per annum. rate of interest. This amount of Rs.30,000 is treated as income of the husband, notwithstanding the fact that this amount was gifted to his wife knowingly and solemnly and he is free to use as he pleases.
What pocket money?
Let us understand in detail the savings made by the lady of the household out of the monthly allowance she receives from her husband to run the household or meet her own expenses. This is known as pin money. in other words
This is the money that he gets to run the house from time to time, it is a kind of pocket money.
But to call it pocket money would be undermining the authority and capability of a housewife who enjoys tremendous respect in the Indian society.
Pin Money and Correlation Provisions
Let us understand the relationship between pin money and clubbing provisions. Pin Money is an exception to the clubbing provisions which means that any return arising from the investment of Pin Money will not be subject to the clubbing provisions,
The logic is that this money is not a gift but actually saved by his skill. This perspective is supported by a decision of an Appellate Tribunal as there is no specific provision in this regard in Income Tax.
What amount can be claimed as PIN money
Another question arises with regard to the quantum of money, which is appropriate to be called pin money, so as not to misuse the concept with malicious intent to circumvent clubbing provisions.
The size of the income of the husband, total household expenditure, limit of contribution made towards household expenses, justification for the amount of savings being made by the housewife, etc. should be taken into account.
In other words, to be called pin money, it must be a reasonable amount saved by the woman from the monthly allowance received by her husband; Such pin money can be freely invested by her, without the husband having to worry about the returns in his income.
Hence pin money is considered equal to salary or any business run by him.
Pin money like feminine money
It is worth noting that such pin money should be equated with “Stree Dhan”, which is the amount collected from gifts by the bride and contributions made by relatives and well-wishers. According to the Supreme Court, “Hindu married woman is the absolute owner of her female wealth and can deal with it in any way she can. “Stree Dhan” also has the privilege of being able to retrieve it if she decides to park it with a relative or friend.
The person having the custody of “Stree Dhan” is legally bound to return the same without any condition or lien, if required.
Income tax laws reveal a strange fact that gifts received from husband are clubbed, but gifts received from parents or siblings are not clubbed. Not sure if it intends to glorify the institution of marriage. It is worth noting that clubbing provisions are not limited to cash or bank transfers, but also apply to transfers of other asset classes like shares, mutual funds, assets – wherever there is a possibility of tax evasion. It seems that many laws in India including the Income Tax Act, 1961 have been woven around the fabric of Indian society, in which a woman spends a major part of her life with her husband rather than with her parents and siblings. spends.
To conclude, unless the law makers take a contrary view in future, women can safely save their savings in the form of PIN money from the amount given for household expenses or personal allowances without putting the burden of tax on their husbands. Can keep
(The author is an economist, and finance and business expert. He is the Founder-Chairman of the KCC Group)