I loan my wife at 4%, she puts it in fd at 7%

[Kiran Kumar K]

Husband 55yr, no source of income, only 3cr in savings acc and FDs, 3 land plots worth 2cr. wife 50yr, home maker, no source of income

To build capital for my wife 50yr

I have 3cr in account, I loan my wife 2cr @ 4%, she puts it in fd at 7%

I invest remaining 90 Lkh in Arbitrage fund for 3+ years, rest 10lkh for expenses (enough for 2 year expense)

***will the the 4% be picked up for scrutiny. loaning to my wife at 4-5% interest justifiable

AI Summary

Clubbing of income risk rises when spouse loans fund higher-yield deposits through a concessional interest arrangement.
A spouse may be advanced funds through a genuine loan, even at a concessional interest rate, if supported by a written agreement, actual payment of interest, bank trail, and repayment terms. The main tax concern is clubbing of income where funds are transferred to a spouse without adequate consideration and the resulting income is attributed back to the transferor. A below-market loan used for earning deposit income creates a more debatable position than a market-rate loan.