Save Income Tax By Investing Or Gifting Within The Family
Investing to save income tax has its own positive benefits and aspects.
First, it gives rebate on income tax and secondly it automatically improves your investment profile. After all the possible investment modes that provide rebate from income tax have been used, a person starts wondering where to invest to save tax further. The best option is to start investing within your family.
Insurance For Spouse/Child
Parents invest in an insurance policy or open a fixed deposit in the name of their kids to make their future secured. However, this same act can help you save tax.
Many people invest in the name of their spouses or kids to save income tax. Life insurance provides vast scope for making provision for spouses and children as there are multiple policies dedicated to women, and kids in this sector.
Although there are many investment instruments that allow investing in the name of spouse or child, some come with certain restrictions. Apart from investing in insurance policy or opening a fixed deposit, you can also open Public Provident Fund account or even invest in stocks on the name of your children or spouse. The provident fund account has certain limitations for investment. You can open the account in joint holding or single holding.
Gifting A Property To Save Tax
Many times, you have lot of extra cash and wish to invest directly in your name. However doing so can attract extra tax liability and may bring you in the higher tax bracket. You can take a different route and make an indirect investment to get best of both the things- saving on tax and investment benefit. You can purchase a property in the name of your spouse, children or parents in the form of gift.
g to the existing law related to gifting, any gift that is received in cash or asset if is worth 50,000 or more it is taxable. However, if the recipient is related to the giver of the gift, this law is not applicable. Moreover, gifts received during marriage or under inheritance/Will do not attract tax.
Who Are The Relatives And How Can You Claim The Save Income Tax Benefits?
Relatives to whom you can gift a property to save on income tax include siblings, sisters, brothers, spouse, parents and any lineal descendant or ascendant of the spouse or the individual. According to income-tax laws any money transfer, whether in cash or cheque or the transfer of immovable as well as movable assets like shares, securities, jewelry, property, sculptures and paintings comes under the title of gift.
It is important that the transfer of cash or asset should be registered and the due registration charges including stamp duty should be paid.