ITR Filing 2025: Income Tax Department Tightens Scrutiny on Joint Mutual Fund Holdings

With ITR filing for 2025 underway, many taxpayers are discovering that the Income Tax Department is paying closer attention to joint mutual fund investments. This increased scrutiny can sometimes be confusing, especially when one joint holder is not actively earning or filing tax returns.

What Happens with Joint Mutual Funds?

Joint mutual funds are common among couples and family members for convenience. However, if one person invests all the money and the other is a non-earning partner, like a homemaker, it raises questions about who is responsible for paying taxes.

ITR Filing 2025: Who is Responsible for Tax Payment on Joint Mutual Funds?

Indian tax law clearly states that the person who provides the money for the investment must pay tax on any income earned from it. So, even if mutual funds are held jointly, the income tax liability lies only with the one who funded the investment.

For example, if a husband invests from his savings in a joint mutual fund account with his wife, he alone is responsible for reporting and paying tax on any capital gains or dividends. The wife, in this case, holds the units jointly but has no tax liability if she has no independent income.

Why Does the Non-Earning Spouse Appear in AIS?

Mutual fund houses report specified financial transactions (SFTs) such as purchases exceeding ₹10 lakh in a year to the Income Tax Department. They include PAN details of all joint holders, even if one has no beneficial ownership. This is why the non-earning spouse’s Annual Information Statement (AIS) may show these transactions.

Will This Trigger a Tax Notice?

There is a chance of receiving automated queries or notices if significant transactions appear under the PAN of someone who does not file an income tax return. However, these are usually easy to resolve.

ITR Filing 2025: How to Respond to a Tax Notice?

If the non-earning spouse receives any query or sees these transactions in AIS, they should:

1. Log in to the Income Tax e-filing portal and open the AIS section.
2. For each mutual fund transaction listed, provide feedback by selecting “Information relates to other PAN.”
3. Add a note explaining that the investments were made by the spouse from their income, who is responsible for tax reporting.

Read more: ITR Filing 2025: AI is Tracking Suspicious Tax Claims Made by Salaried Taxpayers!

Conclusion

With ITR filing 2025, it’s important to understand that joint mutual fund holdings can appear in both partners’ AIS. But tax liability depends on who invested the money. Properly responding to AIS queries can prevent unnecessary tax complications and clarify your tax position.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.