Your Spouse Can Cut Your Taxes

Section 64 of Income Tax Act says that Income derived from the money or assets transferred by an Individual to spouse, directly or Indirectly, otherwise than for an inadequate consideration shall be clubbed and hence taxable in the hands of Transferor.

For Instance: If Mr. A purchase a house (Rs.20,00,000) on 01'April'2015 on his wife's name who has not contributed any amount to purchase it , Rental Income earned on it throughout the year (Rs.25,000 X 12 months=Rs.3,00,000)In that case on application of provisions of Section 64 , that whole income of Rs.3,00,000 will be clubbed in the hands of Mr. A and accordingly Mr. A required to Pay Income Tax on whole of it.

Provisions of section 64 will apply only if the relationship of assessee and spouse exist on the date of transfer of assets and accrual of income.

Now, To cut your taxes without invoking the provisions of Section 64, Mr. A should have to give a loan to his wife for Rs.20,00,000 in exchange she can give a small amount to him (Mr. A ) that represent Interest on unsecured loan.In that case the Rental Income earned on the said property would become chargeable to Tax in the hands of wife of Mr. A on whose you can claim the benefit of Slab Rate & 87A again , which consequently result in payment of Taxes at very very lower amount.

If you made various investment and paid taxes on it at higher rates then you can save lot of taxes by diverting those investments to your spouse; by this you can use additional slab of Rs.2,50,000.

If you had made certain Fixed deposits with Bank or Financial Institutions on which you earn an income of Rs.10,00,000 per annum , consequently you need to Income Tax of Rs.1,25,000 on it ,However if you divert half of your Fixed deposits on spouse's name in that case you and yours spouse Income Tax Liability will be reduced to Rs.50,000By this simple tool you can save your Taxes without doing any extra or special.

Some other ways to save Income Tax by Investing money on Spouse's name are :• Depositing Money in PPF (Public Provident Fund Account) on which interest is fully exempt• Sale of Shares/Securities after the expiry of 1 year from the date of purchase.• Contribution of sum toward Life Insurance Premium on spouse's name.• Payment of Medical Insurance premium for spouse• Payment toward Preventive health checkup of spouse• Payment of Interest on Education loan for higher education of spouse• Amount paid for Medical Treatment for Specified Special disease of Spouse.For more information visit:- https://taxzippy.com/

 

 

Source : articlesbase.com