Need your suggestions- how to save tax?

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CA
426 Points Joined November 2008

One of my friends' income falls in the 30% bracket. He is also earning a lot of interest on fixed deposits. He does not want to invest in PPF (for maintaining the liquidity). What is the other opton he has to save tax on this interest income?


If he closes his FD account and transfers that money to his wife's account who then opens a fixed deposit, will that solve his purpose? His wife has no other source of income.
Will any clubbing of income rules apply here?

Please provide your suggestions

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On 02 August 2013 at 09:43 Report
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Tax & Investment Consultants
115 Points Joined August 2013

Nupurji,

If one gift any amount to his wife,then the income received on the same is clubbed in Husband's income and accordingly taxed in the hand of husband.

Why don't your friend go for tax saver Mutual fund investment.By doing so,He can save tax as well as can get a good return in long term.

Thanks & Regards,

M/s S.R.Associates

Cell:9685595760

e-mail:srassociates0713 @ gmail.com

https://www.facebook.com/pages/SRAssociates/600829063295496

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On 10 August 2013 at 17:49
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Wealth Manager
5293 Points Joined December 2008

PPF is ideal for retirement but the investment continues upto 15 years. 

National saving certificate offers good interest around 8.4% pa, no upper limit, lock-in period is 5 years. The interest is of course taxable. 

PO MIS is another one offering decent interest. Lock-in period is 5 years, and interest is taxable. Invest upto 4.5 lacs single or 9 lacs joint. 

If money is paid to wife and she invests, the income earned from it shall be chargeable to husband. 

 

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On 28 August 2013 at 07:48


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