Being an NRI, Invest for Your Spouse and Reduce Taxes
Posted on October 01 2020
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As a Non Resident Indian, you must be having multiple properties, investments in India and few of them must be in the name of close family members like spouse, children or parents. Unknowingly and unnecessarily, you may actually be evading taxes in India.
Investment in the name of spouse: This we feel is one of the most misused and most inappropriate method of Tax planning as most Non Resident Indians are not aware of the Tax implications and use this incorrectly to plan their taxes. Investing in the name of spouse or children or even parents is common practice for most Non Resident Indians (NRI / PIO / OCI). But one thing that the NRI must keep in mind is that even if the investments are in someone else's name, the tax liability may actually be yours and they are required to be mentioned in your Income Tax Returns, as per law due to the income clubbing provisions applicable to the Non Resident Indians also.
Failure to do so may invite a tax notice to the person in whose name you have invested as well as your Income Tax Returns are also defective as you have under declared your Income. So this is a double whammy.
As per Section 64 of the Income Tax Act, any income from investment made or any asset purchased in the name of any close relatives (spouse, minor child or daughter-in-law) is required to be clubbed with the income of the person making the investment initially and has to be taxed accordingly.
This applies to all Resident and Non Resident Indians and for all types of investments such as shares, fixed deposits, land, building, post office savings and mutual funds.
This tool ad option needs to be used as per defined in law and not on a adhoc basis.
Failure to do so may invite a tax notice to the person in whose name you have invested as well as your Income Tax Returns are also defective as you have under declared your Income. So this is a double whammy.
As per Section 64 of the Income Tax Act, any income from investment made or any asset purchased in the name of any close relatives (spouse, minor child or daughter-in-law) is required to be clubbed with the income of the person making the investment initially and has to be taxed accordingly.
This applies to all Resident and Non Resident Indians and for all types of investments such as shares, fixed deposits, land, building, post office savings and mutual funds.
This tool ad option needs to be used as per defined in law and not on a adhoc basis.
Tax Assist is a professional income tax consultancy in India for both corporate houses and individual tax payers; the latter comprising Salaried Individuals, Seafarers, Professionals and Non Resident Indians.
With the help of Tax Assist and its team of income tax professionals, taxpayers can minimize their Income Tax liability, maximize their net income and create opportunities to save for current and future needs while maintaining proper accounting standards and income tax returns which are compliant with the Law.
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