Published On: Sun, Dec 31st, 2017

How To Save Tax By Gifting Within Family

By means of legal transferring the income as gift to their own family members, taxpayers can enjoy the tax exemption limit.

How To Save Tax By Gifting Within Family

If the income of a family is generated by single person, then the tax liability on the single person will be much higher. The option to this is, he should share the income as gift by legal transfer to his own family persons like parents, major children (not minor), in laws and except spouse.
For example, if the parents will receive the gift from you will not be taxed, but the income generated on the gift value will be considered as their own income and will be taxed.

Thus by generating a separate source of income to every family person and filing the tax separately for each of them, will intelligent means of claiming the tax exemption, deductions, rebates, etc. This will save higher tax liability.

Like for example, you can directly take the benefit of the tax exemption limit of senior citizens (parents) and women.

Also to be noted, as per Section 64 of Income Tax Act, all the direct and indirect transfer of funds between husband and wife will be taxed. So even if you are gifting any value gift or amount to your wife /husband that will lead to clubbing of the income and will be taxed

To maximize the benefit of gifts, and avoiding any clubbing of income which will attract tax, you can make or receive gifts from any relatives other than your spouse and in case of daughter in law from father in law.

About the Author

- Paul Linus is an eminent online journalist who has been writing news, features and editorials on different websites from across the world for about a decade.

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