I was a Dubai-based non-resident Indian (NRI) for about 22 years. However, I returned to India in June 2011. My wife was an NRI for about 16 years and she returned to India in March 2009. In August 2014, after I ceased to be Resident but not Ordinarily Resident and became a resident, I sold my residential apartment in Dubai. The proceeds were credited to my local bank account in Dubai. I then used a Dubai-based foreign exchange company to transfer the funds to my wife’s resident Indian bank account and mine as well. My wife opened fixed deposits (FDs) with these funds from which she is earning interest income. Will I be allowed to file a separate tax return for her or are clubbing provisions applicable for the interest income? I incurred a long-term capital loss (LTCL) in the property sale transaction. Can I include the full LTCL amount for carry-forward, or should I include a part of it my wife’s tax returns too?
—T.V.S. Sriram
Under the Indian income tax law, if your spouse earns an income from investments out of the money gifted by you, such income may be clubbed with your income.
