Loan/Gift to wife

Tax planning 973 views 1 replies

Hi Experts

Please answer my query after considering below points

1. I am a salaried employee with CTC of 12,50,000. 

2. Currently I do not have  Income from any other sources.

3. Rs 8000+ per month are being deducted from my salary towards TDS.

My Query

Out of my saving, I would like to make a Fixed Deposit . I understand that there are following options open to me

1.Fixed Deposit in my name: With this option, I will have to bear income tax and I come uner 30% bracket.
2.Gift to spouse: However this option  will attract Section 64 on clubbing of Income. In this case, even though clubbing is attracted she can always claom deductions u/s 80 before income is clubbed in my hand isn't it?

3. Loan to Wife:  I give loan  to wife and then she makes a deposit in her name thereby not attracting provisions of section 64 (Clubbing). Interest income will be taxed in her hand and she can also claim interest paid as deduction. Is this technically possible? Will this be questioned by Asessing Officer  as a transaction resorted to avoid Income Tax. This will definitly not attract Section 64 though.

What is the best way to avoid tax on the FD interest. Please advise.

I am planning for home loan, but Interest amount (max 150000) and principal amount 80 C will not be sufficient
to cover tax on interest income.

Replies (1)

as you are in higher tax bracket, u can gift the money to wife and invest in some TAX FREE INSTRUMENT to avoid clubbing, viz Mutual funds, PPF 


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