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Soubhagya Kumar Patra (Querist)

01 August 2012 Dear Experts,

One of our client (salaried) is at 30% tax bracket. He holds one Private Equity Investment of Rs. 70lacs which is into Reality Funds. He gets some payouts from the fund once in three months which eventually attracts additional 25k-40k tax liability.

The PE fund house provides form 16 for these payouts also.

The tax consultant of the client suggested him better transfer the ownership of the investment to his wife (house wife) and let her pay the tax which eventually may come to nil so that the client can save that 25k-30k of tax liability.

I feel it's not a right advice, client may get into some issue as he is trying to avoid tax.

If it has been exercised, what will be the tax implication then ? Can the client save taxes as the consultant suggested ? Or it will get clubbed again ??

Need your suggestion. Thanks in advance :-)

Amol S Joglekar

Amol S Joglekar (Expert)

01 August 2012 A TAX CONSULTANT is always expected to come up with such beautiful suggestions. What you need to assess is the RISK involved in this. The risk is very high. It is a clear case of transfer of asset without consideration. Since amount involved is 7 million, not justified to go for it.

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Soubhagya Kumar Patra

Soubhagya Kumar Patra (Querist)

01 August 2012 Thanks Amol for this quick and appropriate suggestion.

Amol S Joglekar

Amol S Joglekar (Expert)

02 August 2012 You are most welcome.

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