Can you save tax by transferring money to wife’s account?

Do you transfer money to your spouse’s account so he/she can meet personal expenses, does that money earn an income. Or do you consider it loaned. Let’s understand, how is the income from such transfer treated from income tax standpoint.
Money is Invested in Shares or Fixed Deposits or other Assets– The shares may have been purchased in your wife’s name or fixed deposits made in her account – but the income from such fixed deposits or gains from the wife’s shares transactions shall be clubbed with your income. As per clubbing provisions of Income Tax, this is considered as your own income and taxed at slab rates applicable to you. Even if there are capital losses from sale, those get added too.
Money is considered Loaned – There could be a situation where you have genuinely transferred money to your wife’s account to meet her financial needs, for eg to help her start a business. The amount is considers loaned and is planned to be returned and interest is charged as well. In case you are charging a reasonable interest and also showing this as your income in your return, income earned by your wife may not be clubbed. However, in cases where amount is shown as loaned to your wife and she is investing that money in shares to earn an income, and thereby you end up saving significant tax by avoiding clubbing of income (gains) on shares, it may be hard to convince the tax authorities about the lender borrower arrangement, given the close relationship of the parties and the tax save involved. Usually in most cases – it’s misused as a tax saving avenue and that is what the tax authorities want to be careful of.
Only to meet Personal Expenses – When one of a couple is a home keeper and is not earning an income, it is commonplace this person receives some money to take care of personal expenses. This has no income tax implication and is not considered an income in the receiver’s hands. However, any interest earned in the bank account may still be clubbed.