abhishek (Staff) (81 Points)
19 November 2011Hi
My mother has income from FD's and investments , due to whcih she falls in 30% IT slab, and I am planning to start some business(franchise of day care for kids), can this business help me to save tax on my interest income against the expense I will incur in the setup.
I have never been in business before, can you please guide how will I have to proceed to save taxes.
Thanks
Devendra
(Chartered Accountant)
(4775 Points)
Replied 20 November 2011
No. The expense incurred by you in setting up the business cannot be claimed against the income earned from FD Interest.
Regards,
Devendra K
Z
( )
(2960 Points)
Replied 20 November 2011
However the losses from PGBP can be adjusted. Also depriciation expenses can be setoff against income under any head.
edit: Allowed to that assesse only
So if your mother is your business partner then she can claim losses/ depriciation to the extent of holding
IT IS NOT POSSIBLE IN CASE OF COMPANY SINCE THE COMPANY IS A SEPERATE LEGAL ENTITY
However IF FDs are transferred to the company and company incur losses then you can adjust the loss
abhishek
(Staff)
(81 Points)
Replied 20 November 2011
ok so as i get the expenses for setting the business can't be claimed against any income.
But what all things can be considered as depriciation expenses.
- The franchise fee that I will pay.
- All the equipments and hardware purchased.
- Also as the expense to setup the business would be recovered in a period of around 3 yrs, so will the extra amount be considered as losses for these years.
Please let me know what all things I need to keep in mind to start with business, to help me save tax too. Since I have never beem in business before so alos please let me know how to proceed further like registering company, and how to maintain expenses to settle them againt individual interest income.
praveen
(Chartered Accountant)
(6971 Points)
Replied 21 November 2011
You are saying that your mother has income from investments and deposits. So if you start the business in your name then there is no benefit of claiming any depreciation losses or business loss ( if any).
As you say that you will be running a franchise it would be best if you could start up your business in a LLP form or as a company.
You please dont have to worry about the taxes. you only pay taxes on what you earn right.
As your company/firm may require some startup capital you could as well get the capital required from your mother.
Please decide on the style of business i.e. either LLP, Firm, Company etc.
Also try to get in contact with a Chartered Accountant or an Auditor (Atleast) for gaining the complete insights about maintaining accounts and other statutory compliances.
For a startup it is always required that the entreprenuar looks after the business rather than concentrating on these things.
Regards,
Praveen M.R
contact me on my email mrpraveen @ live.com in case you need any more help.
praveen
(Chartered Accountant)
(6971 Points)
Replied 21 November 2011
You are saying that your mother has income from investments and deposits. So if you start the business in your name then there is no benefit of claiming any depreciation losses or business loss ( if any).
As you say that you will be running a franchise it would be best if you could start up your business in a LLP form or as a company.
You please dont have to worry about the taxes. you only pay taxes on what you earn right.
As your company/firm may require some startup capital you could as well get the capital required from your mother.
Please decide on the style of business i.e. either LLP, Firm, Company etc.
Also try to get in contact with a Chartered Accountant or an Auditor (Atleast) for gaining the complete insights about maintaining accounts and other statutory compliances.
For a startup it is always required that the entreprenuar looks after the business rather than concentrating on these things.
Regards,
Praveen M.R
contact me on my email mrpraveen @ live.com in case you need any more help.
abhishek
(Staff)
(81 Points)
Replied 21 November 2011
| Originally posted by : praveen | ||
 |
You are saying that your mother has income from investments and deposits. So if you start the business in your name then there is no benefit of claiming any depreciation losses or business loss ( if any). As you say that you will be running a franchise it would be best if you could start up your business in a LLP form or as a company. You please dont have to worry about the taxes. you only pay taxes on what you earn right. As your company/firm may require some startup capital you could as well get the capital required from your mother. Please decide on the style of business i.e. either LLP, Firm, Company etc. Also try to get in contact with a Chartered Accountant or an Auditor (Atleast) for gaining the complete insights about maintaining accounts and other statutory compliances. For a startup it is always required that the entreprenuar looks after the business rather than concentrating on these things. Regards, Praveen M.R contact me on my email mrpraveen @ live.com in case you need any more help. |
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I plan to start the business in the name of my mother, so I would be able to clain the depriciation benefits.
Also how can I claim the depriciation benefits, and the amount invested as capital against her income from investments to save on personal taxes as well apart from company income.
Z
( )
(2960 Points)
Replied 21 November 2011
@ Abishekh
I earlier stated opinion assuming partnership but in next post you mention to create a company so I later edited my post.
Since company is a seperate legal entity your mother will not be able to take benefit from losses of company
If investments are transferred to company and then there is loss to company then such loss could be adjusted with income from investment. Depriciation is business expense which if not setoff with income u/h PGBP can be adjusted against income any other head (but for that assesse only, so if investments are transferred to company then company can set off the unabsorbed depriciation against income from investment)
Note: If there is revocable transfer then according to the provisions of clubbing of income , the income from such investment shall be clubbed to the income of transferror
For money you may take LOAN at 0% interest from your mothers investment .
Company will be in 30% tax bracket (not according to slab rate)
I agree with Mr. Praveens commnet.
@*CS Siddharth Bumb. *
(B.Com, CA Final, CS )
(5270 Points)
Replied 21 November 2011
| Originally posted by : Devendra | ||
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No. The expense incurred by you in setting up the business cannot be claimed against the income earned from FD Interest. Regards, Devendra K |
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