Transferring side business to father's name

1019 views

Save Share

vinit karan

29 Points Posted on 21 October 2023

Hi everyone, I am in a bit of a dilemma here.

Background:

I am working as a manager in a tech company and I come in 30% tax bracket. I started a side business a few months back by publishing apps on App Store and Play Store and earning around 30k/month and I am positive that this will increase more in coming months.

My company allows side projects if its non conflicting and as long as its not incorporated as a business. So my company knows about this project. I am showing the earnings from my side project as "income from other sources" while filing ITR.

Dilemma:

My question is should I transfer my side project to my father's name? My father is a retired govt employee with 35k/month pension. This will help me save 30% tax on my side income. And also if in future it grows to around 20LPA, I have to register it as a business which as per my employer, I can't do. How legal is it in India? All the work will be done by me but income (in terms of remittance from Apple/Google) will come to my father's bank account which i might use. In future if I need, I can register a business in his name. But before that, I want to know if what I am planning is legal or will it put us in trouble.

Replies (4)

Quick Summary

An individual earning ₹30k/month from app publishing is exploring transferring the side business to their retired father to reduce their 30% tax liability. The employer permits side projects but not incorporated businesses. The user is concerned about the legality of receiving income via their father's account and potentially registering a business in his name later, especially if the income grows significantly.

sabyasachi mukherjee

Profession

19978 Points Posted on 25 October 2023

No not possible.

vinit karan

29 Points Posted on 25 October 2023

Hi sir, you mean should i transfer or not? And why?

CA Raj Doshi

Practising CA

5649 Points Posted on 06 November 2023

Dear Vinit, Please check your PM.

Aashok Kumar Sharma

Finance/Compliance Consultant

76809 Points Posted on 07 November 2026

Possible only if it's genuinely his business:

• There's no clubbing of a parent's income with a child's (Sec 64 covers spouse, minor child and daughter-in-law only). If your father actually runs the business (signs contracts, controls the bank account, deals with clients) and it's in his name with his GST and bank account, the income is his.

• If you do the work and simply route income into his name, it's a sham. The AO can tax it in your hands as the real earner. Bank trails, client communications and who does the work will decide it.

• A legitimate option: you gift capital to your father (exempt, he's a relative), and he invests it or runs a business. The income on it is his. No clubbing for parents.

• Also check your employment contract. Side businesses may be barred.