Tax after retirement

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Dibyendu Roy (Querist)
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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.

CA S K MISHRA

CA S K MISHRA (Expert)
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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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Dibyendu Roy

Dibyendu Roy (Querist)
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06 June 2016 Thank you for answering my query

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