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Effect of joint investments on income tax law

The law does not recognise joint assessment of husband and wife.

Each is assessable on his or her own income except for the need of clubbing income from asset transferred by an individual to a spouse.

The reader has not stated whether the source of the deposits in the joint names are all from his own sources or income from assets transferred by him to his wife as gift. If so, the entire income will be assessable subject to exemption limit only in his case.

If, however, the source of funds is from wife’s earnings or from her wealth received as stridhana from her parents, such funds will belong absolutely to her and she is accountable for tax on the same subject to exemption limit.

Where the sources are from both husband and wife, the source from each will have to be identified and proportionately taxed separately availing the exemption limit for each.

One cannot split up the income equally merely because they have been invested in joint names, since tax laws would require separate assessment for husband and wife.

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