Top Stories Are you a House Wife having Savings Deposit? Know Income Tax Exemption for Savings Deposit by House Wives Housewives need to file ITR if income exceeds the limit from sources like fixed deposits, or gifts. Tax rates vary based on age and income By Yogitha S. Yogesh – On June 6, 2024 12:48 pm – 5 mins read The Income Tax Act provides individuals different exemptions and deductions to reduce taxable income. Income tax deductions and exemptions apply to housewives.

Housewives are generally not taxed for the household work they do. However, if a housewife earns income from any source such as investments, rent, or other business activity, she may be liable to pay income tax depending on the amount earned and applicable tax laws. Housewives can invest in tax-saving instruments like PPF, NSC, and tax-saving fixed deposits to avail of deductions under Section 80C of the Income Tax. Housewives need to file ITR if income exceeds the limit from sources like fixed deposits, or gifts. Tax rates vary based on age and income. Basic Exemption Limit: For a housewife, like any other individual, the total income up to the basic exemption limit is not taxable. For FY 2023-24, the basic exemption limit is ₹2.5 lakh for individuals below 60 years of age. If the total income (including interest from savings) does not exceed this limit, no tax is payable. As per the old tax regime applicable for FY 2023-24, a housewife ( aged below 60 ) who earns less than Rs.2.5 lakh will not be subject to taxation. If the housewife falls in the super senior citizen category, i.e., 80 years and above, the minimum exemption limit has been increased to Rs. 5 lakh as per the old tax regime. In the new tax regime, the basic exemption limit will be Rs 300,000, up to which no tax liability exists, regardless of age. Income Tax Slab For Women (New Tax  Regime) Sources of Cash Deposits:

The source of the cash deposit must be explained and should ideally be from legal sources such as savings from household expenses, sale of personal assets, or cash gifts. Unexplained cash deposits can attract scrutiny and penalties. Housewives often accumulate savings from the household budget, and if the cash deposit is within reasonable limits and can be justified, it may not attract tax. Housewives possess their income from different sources, as they do not fall under the category of salaried or self-employed individuals. Money received from the husband to run the household is the main source of Income for Housewives. A housewife can consider the money received from her husband as her income to look after the household. If the husband invests his income under the name of his wife, then it gets treated as income of the husband. Thus, the husband would be liable to pay the taxes. However, if the wife earns any money from such income, it will get taxed under the wife’s name.

Gifts from specific relatives are not taxed under the IT Act 1961, irrespective of the amount. Any gifts received from other individuals exceeding the value of Rs.50,000 will be considered income, and the housewife will have to pay taxes accordingly. Under Section 80G of the Income Tax Act, 1961, a housewife is eligible for a tax deduction if donations are made to any distinct charitable organisation. Post Office Savings Account, interest of up to Rs.3,500 (individual accounts) and Rs.7,000 (joint accounts) is tax-exempt under Section 10(15)(i) of the Income-tax Act. apart from the Rs 10,000 exemptions available under section 80TTA for individuals below 60 years of age and up to Rs 50,000 for senior citizens under section 80TTB of the Income Tax Act. Banking and Documentation: Deposits exceeding ₹2,50,000 during the demonetization period in 2016-17 had to be reported to the tax authorities. This limit was generally accepted as reasonable savings by housewives and senior citizens. Proper documentation should be maintained to explain the source of cash deposits, especially if they are substantial.

This includes proof of savings, sale receipts of assets, or gift deeds. Tax Filing: Housewives need to file income tax returns if their total income exceeds the basic exemption limit. They must declare all sources of income, including interest from savings accounts, fixed deposits, and any other taxable income. In India, the Income Tax Act, of 1961, provides certain exemptions and deductions that may be relevant to savings deposits, including those held by a housewife. Here are the key points to consider:

Taxable income is the sum of all your earnings minus any allowed deductions and exemptions. As a housewife, you can take advantage of deductions like investing in specified savings schemes such as the Public Provident Fund ( PPF ) and National Saving Certificate ( NSC ). Provisions for Exemption Interest Income from Savings Account: Under Section 80TTA of the Income Tax Act, individuals ( including housewives ) can claim a deduction of up to ₹10,000 on the interest earned from savings accounts in banks, co-operative societies, and post offices. This deduction is available to all individuals below 60 years of age. Interest Income from Fixed Deposits: Unlike savings accounts, the interest earned from fixed deposits does not qualify for Section 80TTA of the Income Tax Act deduction. It is fully taxable under the head “Income from Other Sources.” If the housewife’s savings are funded by her spouse, and if the interest income arises from the deposits made by the spouse, then the income may be clubbed with the spouse’s income under Section 64 of the Income Tax Act.

This means the interest income might be taxed in the hands of the spouse instead of the housewife. TDS on Interest   If the interest from bank deposits exceeds ₹40,000 in a financial year, banks are required to deduct TDS (Tax Deducted at Source) at the rate of 10%. However, if the housewife’s total income is below the taxable limit, she can submit Form 15G to the bank to prevent TDS deduction. Case Laws : Delhi ITAT in the case of Leela Devi VS ITO point out that a “housewife’s contribution in the family is “immeasurable” and thus money saved over the years by a Housewife, if deposited during the demonetisation period, cannot be deemed to be income assessable under Income Tax” Ramesh Rani Chatwal vs ITO CITATION: 2023 TAXSCAN (ITAT) 1590, The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that an addition could not be made on cash deposited to the bank account from the husband’s savings for payment of a bank loan. In the case of Tuhinara Begum vs J.C.I.T. CITATION:   2017 TAXSCAN (ITAT) 102, A division bench of the Kolkata Income Tax Appellate Tribunal (ITAT), last week held that cash transactions between husband and wife would not attract section 269SS of the Income Tax Act, 1961. ITAT Kolkata in the case of Dr. B.G. Panda concluded that “though the expenditure was incurred by the husband being the karta/head of the family, it could not be said that the wife could not have any interest of her own in this house being constructed. The transaction was neither a loan nor any gift as no ‘interest’ element was involved and there was no promise to return the amount with or without interest. It was clear that the money given by the wife was a joint venture of the family.” In State of M.P. v. G.S. Dall and Flour Mills, AIR 1991 SC 772 ; [1991] 187 ITR 478, the apex court held that executive instructions can supplement a statute or cover areas to which the statute does not extend.”

The court said, “The instructions were issued by the board, for the benefit of the person mentioned in the instructions, including the housewife and to mitigate their grievances and also save them from the rigorous provisions of the Income-tax Act.” Conclusion Since direct income is not available, housewives are typically exempt from paying taxes. Moreover, income from other sources will only be subject to taxation if it exceeds the exemption limit.  The ITR form for housewives is not different from that of salaried individuals. Housewives can invest in tax-saving instruments like PPF, NSC, and tax-saving fixed deposits to avail of deductions under Section 80C of the Income Tax Act. Housewives need to file ITR if income exceeds the limit from sources like fixed deposits, or gifts. Tax rates vary based on age and income. Income sources for housewives include household expenses and interest from deposits. Deductions like medical expenses and donations are available. Taxable income is total earnings minus deductions. Housewives can file ITR online through the income tax portal.