Clubbing of FD Interest Income – Valid Options

Forums Tax Planning Clubbing of FD Interest Income – Valid Options

Clubbing of FD Interest Income – Valid Options

I have been querying this forum to avoid clubbing of FD interest income ( One’s salary income is invested in her wife’s name ) with valid options but could not get any inputs. However,based on discussion with our corporate auditor, below are possible options:
Split the value into two major parts. A. Say 10 lacs, bought in cash mode, from her dad/mom for those X yrs of married life, for household expenses.
            –  The expenses amount was compensated by hubby, by transferring amount to her bank account and she booked FD etc 

B. Sold ( Not loan ) her excess X sovereign of jewels to hubby for 10 lacs, for investment purpose
     Transactions:
         – Say 10 lacs transferred from hubby account to her own account on various dates/given date and FD booked etc
  Lets discuss!

Profile photo of sunil Asked By: sunil 2 replies 1 helpful answers Last Updated: 3 weeks, 6 days ago
  • Profile photo of sunilsunil
    Participant

    I have been querying this forum to avoid clubbing of FD interest income ( One’s salary income is invested in her wife’s name ) with valid options but could not get any inputs. However,based on discussion with our corporate auditor, below are possible options:
    Split the value into two major parts. A. Say 10 lacs, bought in cash mode, from her dad/mom for those X yrs of married life, for household expenses.
                –  The expenses amount was compensated by hubby, by transferring amount to her bank account and she booked FD etc 

    B. Sold ( Not loan ) her excess X sovereign of jewels to hubby for 10 lacs, for investment purpose
         Transactions:
             – Say 10 lacs transferred from hubby account to her own account on various dates/given date and FD booked etc
      Lets discuss!

  • Profile photo of siddharthsiddharth
    Participant

    Pls can u explain me how to open new thread to ask my own question here !? I couldn’t find the option to “post question”

  • Profile photo of Nitesh BindNitesh Bind
    Participant

    Dear Sunil, First, I am coming to your own points which as you said have discussed with your corporate auditor. As per your first option, You want to show that your Father/Mother in law has given a sum to their Daughter for household expenses and now you are returning it. In this case, First thing is to be noticed is that if father/mother has given any amount to their daughter that would be simply a GIFT which is not taxable at all and also prima facie no question of returning that. But if you say that it is in loan form then you have to prove what was the purpose of loan and where it has been used? Now coming to your second option that is to your wife has sold you her jewels and you are just repaying her over the year. In this the Officer will instantly ask you the agreement and and the deed etc for which and against which the jewels has been purchased and sold by your wife which is hard to prove. Although, there is high chances that Assessing officer would not be satisfied even if you create fake documents like Jewellery sale deed, or Loan Agreements etc. FIRST OF ALL YOU SHOULD KNOW THIS, THAT IT IS ONLY THE INTEREST INCOME ON FDR (NOT THE WHOLE FDR) WHICH WOULD BE CLUBBED INTO YOUR INCOME which i dont think would bother you very much. Second simple thing, i would suggest you is to FIRST TRANSFER THE MONEY INTO YOUR BROTHER ACCOUNT (BEING A RELATIVE AS PER INCOME TAX ACT) WHO AGAIN TRANSFER MONEY TO YOUR WIFE (WHO WILL BE HIS RELATIVE AS PER INCOME TAX ACT) AND CLUBBING PROVISION WOULD NOT APPLICABLE WHEN AMOUNT IS TRANSFERRED FROM ANY OTHER RELATIVE OTHER THAN HUSBAND. SO YOU WOULD SUCCESSFULLY CONVERT YOUR INCOME INTO YOUR WIFE FDR WITHOUT ANY FEAR OF ANY DEFAULTS. THANKS.

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