29 May 2016
My brother is retiring from service next month with a corpus around 70 lakhs.Can he transfer a portion of it to his wife's name so that tax burden in post retirement years lessens.In that case will the clubbing provision u/s 64 will be applicable? How can he invest so that he may have minimum tax burden in the post retirement period.
29 May 2016
Income accrued on amount transferred to spouse will attract clubbing provision. To ensure a regular stream of income, you need to deploy your retirement corpus in the right products.There are four products to choose from: Senior Citizens’ Savings Scheme (SCSS), five-year bank fixed deposits (FDs), Post Office Monthly Income Scheme (Pomis) and annuities of LIC. Equity/equity mutual funds: Longterm capital gains (on redemption after a year) from stocks and equity mutual funds are not taxed. Hence, these two products are ideal for investing a part of the corpus. Invest directly through DEMAT in stock of Blue chip companies or though Mutual Fund scheme. Dividends from stocks and equity mutual funds are also tax-free. So invest in high Dividend Yield stocks. Balanced funds, or equity-oriented hybrid funds, are safer than stocks/equity mutual funds as they invest up to 35 per cent assets in government and corporate bonds.Balanced funds have been able to generate double-digit returns over the years despite exposure to low-return debt securities.
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