Transfer and invest funds legally

Many persons who have not filed returns are getting intimations from Income Tax department. The main reason is to identify and find out if the amount invested by that person has escaped tax. Many of them transfer money to senior citizens to gain the extra percentage in bank fixed deposits. Why do all that and put the senior citizen through all the pain and pressure in their old age because of income tax intimations, when there are easier ways to save tax and better ways to increase your tax free income. Here are some options

• Whenever you transfer amounts to your relatives invest in tax free investments, first benefit is amounts transferred to relatives is free of gift tax and the second would be that since it is invested in tax free investments the income would be tax free. The income received can be reinvested anywhere after that and would not be clubbed with the income of the person giving gift.
• You can invest in your minor child’s name for tax free income up to Rs.1,500/- per child (max 2 children), so taxable income generated in minor child’s name is tax free to the extend of Rs. 1,500/- per child. Also once the child becomes an adult, the income generated would not be clubbed with your income.
• Invest your money in equity, either in the form of direct shares or units of Equity Mutual Funds, any investment kept for more than a year is free of capital gains tax. Any dividend received is also tax free.
• In case you are investing in your parents name ensure that the income generated does not exceed the taxable income slab.

Just do the above and become tension free, your family will also be happy.