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Tax planning

garvit bharti (CA FINAL) (370 Points)

27 March 2014

An individual is earning high income. and her spouse is a home maker. how can that individual show some part of his income in favour of the spouse to take advantage of the slab of her spouse. Pls suggest thanks

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17 Replies

Manoj Mehta (Head Of Department (Accounts & Finance)) (1479 Points)
Replied 28 March 2014

Dear garvit, it is not possible as clubbing of income will club it on section 64. But a gift deed can help you on this case. Regards

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garvit bharti (CA FINAL) (370 Points)
Replied 28 March 2014

Exactlyyy.... And is der any limit of giving gift to spouse.? And whether gift deed should be a registered one ?? Thanks dear manoj pls enlighten the matter

Manoj Mehta (Head Of Department (Accounts & Finance)) (1479 Points)
Replied 28 March 2014

Sir as per section 56 gift is non taxable if made to a relative and wife is covered under the definition of relative. And yes a registered gift deed can help you in doing so. Regards

garvit bharti (CA FINAL) (370 Points)
Replied 28 March 2014

Thnks mr manoj.... I appreciate ur response

CA Deepesh Ruhela (Keen to Learn) (3271 Points)
Replied 28 March 2014

Yes, gift is not taxable in the hands of Wife, but the amount is still taxable in the hands of husband, because here gift is provided out of taxable income. This is a Diversion of income which is still not reduce the tax liability of assesse(husband). No gift should be made to the spouse as it will attract clubbing provisions and any income accruing from the gifted property/funds will be taxed in the hands of the transferor only i.e Husband only. Sec.64(1)(iv).

Gravit can you please explain the source of income of assesse (husband)?

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Mihir (Wealth Manager) (5293 Points)
Replied 28 March 2014

Giving gift to spouse will not affect the tax liability of the individual.

1 Like

garvit bharti (CA FINAL) (370 Points)
Replied 28 March 2014

@ deepesh The assessee is an advocate.He wants to ruduce his tax liability by showing some part of income in fvr of her spouse who is a home maker only. Should he give gift to her spouse by a registered gift deed? Ultimate purpose is jst to exploit the slab and save tax.

garvit bharti (CA FINAL) (370 Points)
Replied 28 March 2014

@ mihir den cn u pls describe the ways of reducing tax liab.

CA Deepesh Ruhela (Keen to Learn) (3271 Points)
Replied 28 March 2014

Calculate what is the exact amount still pending for investment to get the benefit u/s 80-C.
Whether the premises or office of assessee is registered in the name of spouse? if yes then give the rent to spouse upto Rs 180000 and same will be claim as deducion from the income of assesse. It will help to reduce the tax liability of assessee and create the income of spouse as well.

and for more tax planning please consult with your CA.

Regards

1 Like

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 28 March 2014

Deepesh is correct. The husband assessee can also show the wife to be employed in his firm and claim salary deductions. The wife may be a homemaker but who cares if in the eyes of dept. she is a working professional.

Thanks,

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CA Deepesh Ruhela (Keen to Learn) (3271 Points)
Replied 28 March 2014

but sir if case comes into scrutiny then it is difficult to prove that income(salary) of spouse is attributable to her knowledge or skill i.e genuineness of such payment. And clubbing provision applicable in such case u/s 64(1)(ii), but rent case is not covered here. But one more thing i forget to tell you in earlier reply ,that rent paid to spouse is still clubbed in the hands of assesse, if the said asset transfered by assessee without adequate considration in any previous year (sec64 (1)(iv) read with sec.27, otherwise not. Pardon me for my earlier reply.

Regards

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Income Tax Wala: (Fin. Expert) (Chartered Accountants) (2015 Points)
Replied 28 March 2014

you can take benefit u/s 80C, 80D

and Mr Ruhela is correct if you need more tax planning than consult

garvit bharti (CA FINAL) (370 Points)
Replied 28 March 2014

@ sudesh: Sir 80c is overflwng frm 100000. 80D has already been suggested to client.If you can suggest some more tips,,it wil be gr8.Anyways Thanks to all professionals for sharing their views...

garvit bharti (CA FINAL) (370 Points)
Replied 28 March 2014

@ sudesh: Sir 80c is overflwng frm 100000. 80D has already been suggested to client.If you can suggest some more tips,,it wil be gr8.Anyways Thanks to all professionals for sharing their views...