Q.1255 Transfer of income

between spouses to save income

tax . . .

Question: Hi, As a house wife I am staying with my husband in UAE last 6 year, additionally my visa is sponsored (Dependent Visa) on my husband job visa. As I know any Indian leaving outside INDIA more than 182 days in financial year become NRI. Now the question is, * House wife can able to open a NRE account in INDIA? If yes, then please find the below requested question, * Currently I am doing some handicraft work and earn some cash money irregular base. Currently I don’t have any bank account In UAE. Now If, I am planning to send money through authorize exchange center in my NRE account, then any income tax risk waiting for me when I will be back to INDIA. * Currently my husband have job visa and I have dependent visa. Is it possible in India tax system, my NRI money will start to calculate as my husband income, because of my visa status? Additionally future earned interest will start calculating as a clubbing income of my husband and it increases my husband tax liability. Or India tax system believe, both party NRE account money is an individual assets and both party are, not able to claim others money. Example:- (If I am eligible to open a NRE account) In my husband INDIA NRE account :- have 4,000,000 (40 lakhs) and later when comeback to India taxable Interest gain yearly 6% base 240,000 (2 lakhs 40 thousand) Husband Clubbing income :- Any chance India tax system start calculating this money my Husband Clubbing income (240,000+60,000) = 300,000 (3 lakhs) Or Both party incomes are separate and in my money, there is no legal ownership of my husband. So my taxable income is 60,000 (60 thousand) and my husband taxable income is 240,000 (2 lakhs 40 thousand) Thanks, Answer: Being a non-resident of India [NRI] you are eligible to open NRE account in India. Being a housewife does should not matter as far as opening bank account in India is concerned. • Money you send from abroad to your NRE account would not be taxable in India. There are basically two types of accounts, NRE and NRO. o Money sent to NRE is not taxable and no TDS applies. o Money sent to NRO account is also not taxable but in NRO account the interest earned on the deposit is subject to Indian taxes. TDS is deducted by bank where account is held. A refund of TDS can be claimed when filing Indian tax return if your income is below the tax free income amount allowed. Clubbing provision under section 64 of the Indian Income Tax Act If you have your own NRE account setup and transfer money to your NRE account from abroad; then even if the money you send to your NRE account was given to you by your husband, clubbing provision under section 64 of the Indian Income Tax Act may not apply as the transaction was done abroad. On the other hand, if your husband gave you money to deposit in your account after you have returned to India then clubbing provision may apply. Consult with a tax consultant and get professional advice to alleviate your concerns.