New Delhi: ITR Filing 2024 for assessment year 2024-25 has started and with the July 31, 2024, deadline nearing, here is how you can save taxes by understanding the provisions of the Income Tax Act (I-T Act). Here, you may be surprised to know that your wife can also help you save tax. That’s right, an amount of money given to your wife in the right manner an actually result in tax savings for you.
Clubbing provision under I-T Act
Have you heard of the “clubbing provision” under the Income Tax Act? Under Section 64 of the I-T Act, 1961, clubbing provisions are mentioned.
When taxpayers transfer a part of their income to a family member’s account for tax-saving purposes it may not really cut their tax outgo. This is because the interest earned from the transferred income gets clubbed to the taxable income of the person who transferred the money.
Tips to avoid ‘tax clubbing’
However, there are many ways one can avoid the clubbing of income tax. Let’s check out these provisions:
Transfer to wife’s savings account
If you transfer a part of your income into your spouse’s savings account, and if she is not employed, then, you can avoid paying tax on that amount. TDS is levied on interest earned in excess of Rs 10,000 from the spouse’s savings account in a single financial year. However, you will save on taxes since your taxable income will be reduced by the amount transferred to your wife’s savings account.
Open Public Provident Fund (PPF) Account in wife’s name
You can open a PPF account in the name of your minor child or your wife or in the name of any family member for that matter. Since tax is not levied on interest earned on PPF maturity amount, you will not be liable to pay tax on the investment.
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Income tax payers can avoid levy of ‘Clubbing of Income’ provisions to save on taxes that would have otherwise levied on their income. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
