My client gets salary of 85lacs pa
he transfers 2.5lacs pm to his wife by which she makes investments.
Now the clubbing provisions will be attracted and he will have to pay taxes.
Is it possible by for him to avoid tax anyhow????
3 Replies
Mihir
(Wealth Manager)
(5293 Points)
Replied 18 July 2013
Depends on types of investments. Some returns are tax-free.
Sumit Grover
(Chartered Accountant )
(3652 Points)
Replied 18 July 2013
Yes, the same can be shown as a loan to the wife......and this practise is practically followed.
Studentsca
(CA Practice )
(3577 Points)
Replied 18 July 2013
As money Received by Wife is post tax Income and Income received from Investment will be Taxed but can be avoided if Shown as Income of wife AS Professional Income Received.
Wife Can Show Income from Business / Profession as investment activities can be considered as her Profession as Portolio mangement Services and income arising from this Acivities is chargeable to TAX but She can Claim EXPENSES for Running her portfolio mangement Servises for her Husband, And can even Charge for It from her Husband AND/ OR can also pay Interest to her Husband as money is of her Husband (IF shown As Loan), but AS HER HUSBAND IS GETTING AN SALARY OF rs 85 lakhs which is Chargable to 30 % slab rates so it is Advisible to Charge As portfolio Mangement Services from the Returns received from Investment Activities. As Slab Rates of Wife Are not high As 30 % and also She gets basic Exemption limit of RS 2,00,000/-.
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