Timely and efficient planning can lead a long way in lowering down total tax outgo for Individuals.Â Individuals can also save taxes by investing through family members,Â Â parents, parent in-laws, spouse and child.Â Let analyse the following:
Invest through spouse
Individuals who are married can make a substantial saving of income tax by setting up two separate independent income tax files, one each for the husband and the wife.
If the spouse prior to marriage was already assessedÂ to income tax, then the respective spouse can continue to file his/her income tax return in the same income tax ward/circle where she/ he were assessed. The Permanent Account Number would also continue to be the same.
After marriage all that is needed for a separate income tax return for the spouse is to file the income tax return with his/her new surname and new address. If he/she desires, he/ she can continue to file the income tax return mentioning his/ her old address (before marriage).
Due to marriage if the town changes, then the file the income tax return in the new town according to the new jurisdiction which would be on the basis of residential address.
Thus, as a result of marriage one should plan a separate income-tax file of the spouse; however clubbing provisions would apply in case of direct gift or transfer from one spouse to other.
Invest through major children
Individuals should look to gift to their major children, since now it does not attract gift tax. Â For example, if you have fixed deposits let us say of Rs 30 lacs and you have two major children, then you can segregate the fixed deposit amount and gift them, this will reduce taxes as the two sons will get basic tax exemptions.
Thus, a person making a gift to children can enjoy the benefit of lower income tax incidence in the family. If, however, individuals can also look to reduce taxes by giving interest free loans to their children.
Invest through Parents
Another way to save taxes is to invest through your parents. The Individuals just need to give away some portion of their funds, either as a gift or a loan, to parents as well as parents in-law so that in years to follow the incidence of income tax will be lower as the income on funds transferred by individuals to their parents which would bring in income would be taxed in their hands.
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