XLubbing of Income

Plz help on the following issue:

As per the clubing provisions, any income of minor is required to be clubbed in the hands of either of has parent.

There is a client who is having a big business.

there was some disturbance in his life and his wife along with his 2 year child has separated.

thereafter the brother of the wife has made an Fixed deposit of Rs 1 Crore in the name of the minor child, (mother is not having income)

Every year our client is bound to pay Rs 3 lac due to that FD (aas per clubbing provision) interest on FD @ 10% taxable in the hands of father.

mother is not intented to make any agreement to live apart.

Whether there is any solution is available to the father to prevant the tax outflow of Rs 3 lacs.

Replies (7)

dear somnath,

        father has to obtain an agreement to live apart. in that case, the income will be clubbed in the hands of mother(Since she s maintaining the child)

dear somnath,

        father has to obtain an agreement to live apart. in that case, the income will be clubbed in the hands of mother(Since she s maintaining the child)

agree with mukund

mukund is correct

I AGREED WITH MUKAND

I have a simpler solution I dont know how many will agree....

The Brother gifts the amount to his sister i.e. ur client's wife and sister makes the FD and the interest is earned by the sister then this problem can be resolved...

As it is cmng from maternal home I dont think it should be a problem to make the FD in clients wifes name..

If it has to remain in the present ambit then there is no forseeable solution I can think of

Agree with Mukund. As long as the FD is in minor child's name, it will be clubbed with whichever parent has higher income.

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