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Is it considered legal or considered tax evasion?

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NotMohit

Software Engineer

21 Points Posted on 22 March 2021

Hello, I have 2 situations I need help with.

A. I work as a remote freelancer for different foreign clients and have the option to receive payments in any bank account in India.

1. Can I receive some payments in my family member's bank account to avoid the 50 Lakh 44ADA limit? Is it legal?

2. What if I form HUF or partnership and receive payments in that account? Is it legal?

B. I also trade in the stock market. Let's assume I will have a very successful FY 21-22 in the stock market.

1. Can I create a bank/broker account on behalf of my family members (sibling, mother) and trade using it by transferring money from my bank account to there and from there to the broker's account? This way I will get lower tax slabs since they earn less very little money. Is it legal?

Replies (1)

Naveen

student

226 Points Posted on 22 March 2021

Point A

1. This is not useful because in which account u r receiving is not matters. Under whose name u r raising is matters. If u don't want to cross 50 lacs, raise invoices with u and ur family name. But it is imp that they file income tax return. But ofcourse they need not pay tax by offering under 44ADA.

2. Again in whose account u r receiving the funds is not relevant. I suggest don't form any HUF or partnership. There is no difference between HUF and individual as far as tax is concerned. Partnership firm will only increase ur tax liability.

Point B

Yes u can open in ur family member's name and do trading. U can transfer any amount u want to their bank accounts. We can say gift or hand loan.. Completely legal.

As far as Tax evasion or planning is concerned, it vary from people to people perspective and ideology. But I can assure u. It's completely legal