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!
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