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tax query

Bonita (trainee) (218 Points)

31 July 2009

one of my uncle retired last year and gt the retirement benefits for round about rs.10 lakhs....and he made Fixed deposit in the name of his wife...i just wanted to knw that whether it is the case of clubbing or not...in my opinion the amount transfered is considered to be remittance...and the interest income on FD to be taxable for his wife....what say??pls share your views in this regard...

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CA Manish Agrawal (Chartered Accountant) (115 Points)
Replied 01 August 2009

Originally posted by :Bonita
"	one of my uncle retired last year and gt the retirement benefits for round about rs.10 lakhs....and he made Fixed deposit in the name of his wife...i just wanted to knw that whether it is the case of clubbing or not...in my opinion the amount transfered is considered to be remittance...and the interest income on FD to be taxable for his wife....what say??pls share your views in this regard...	"

It is Nothing but a case of Diversion of Interest Income From The Hands of Your Uncle's Income to Your Aunty's Hand so as to avoid Taxability in the hands of your Uncle Lonely. Rather Your Uncle Should Plan for some alternative e.g. PPF Contribution & interest Thereon (Interest Acrrual on PPF Bank Account ) does not part of your Income. So Many Other Alternatives e.g. Part of that Portfolio may Be Invested in Fortune Companied in Stock Market . My Mean to say is a diversified portfolio management euipped with Excellent Tax Planning may save Tax as well as money.

regards --CA Manish J. Agrawal [S.T.S., B.Com, CA, DISA(ICA), DIRM(ET), Service Tax (E-L), etc.]

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Bonita (trainee) (218 Points)
Replied 02 August 2009

but my query is whether this diversion of income and interest on such will be entitled to clubbing provisions or not...

CA Manish Agrawal (Chartered Accountant) (115 Points)
Replied 03 August 2009

Originally posted by :Bonita
"	but my query is whether this diversion of income and interest on such will be entitled to clubbing provisions or not...	"

Obviously , it is Liable to Income Tax but it has to be find out by Your Assessing Officer. You Can Take a risk Also. Moreover, in hands of your Uncle Your Aunty may Pay Interest on account of providing funds at a lower rate than what offered in Bank Deposit. Than it may be allowed . Generally this are being practiced by public at large as a tax planning tool. If your Aunty is a house wife having a thresold Free limit of Income Tax Rs. 195000/- (A.Y. 2010-11) than it is a good way to plan the Income Tax.