Worried about how the profits from your investments are pushing you into a higher income bracket? Just distribute money within the family so that your tax liability does not go up.The example below shows how a person who earns Rs 9.6 lakh a year can distribute up to Rs 6.96 lakh among five family members.
You, the sole earning member in the family, earn Rs 80,000 a month
Your homemaker wife saves Rs 10,000 from the money you give for monthly expenses. She has no other income and her annual income will be R s 1.2 lakh, with no tax liability. Give Rs 10,000 a month to college-going daughter (above 18).Again, she has no other source of income and her total income for the year will be R s 1.2 lakh with no tax liability. College-going son (above 18) gets Rs 8,000 a month. He too has no other source of income. His total income for the year will be Rs 1 lakh with no tax liability. Give Rs 15,000 a month to retired father (74), who gets a pension of Rs 8,500 a month. If he puts Rs 1 lakh under Sec 80C, his taxable income will be R s 1.82 lakh with no tax liability. Mother (72) gets Rs 15,000 a month. She has no other source of income. Her taxable income for the year will be R s 1.8 lakh with no tax liability. |
If the Rs 58,000 transferred every month was invested in fixed income options such as bank deposits, NSCs and Public Provident Fund, the family’s wealth would grow by R s 4,640 every month. All this is tax free money and completely legal!
