TAX SAVING FOR FREELANCERS, PROFESSIONALS, TRADER & WEB BASED AGENCIES

How to save taxes by investing on spouse name

How to save taxes by investing on spouse name

Well spouse not even can our personal life full of happiness but also helps in financial matters. Investment in the name of spouse can help us in saving taxes. But how is the question we all think about. Well there are certain ways in which one plan tax saving in the name of the spouse.

1)Investments made in tax free investments in the name of the spouse will be clubbed with your income under clubbing of the income as per Income Tax Act, but since the interest earned is tax free hence cannot be taxed in your hands.But when the spouse invests further such income then that will not be clubbed and if income of the spouse is less than basic exemption limit then will not be taxed.

2)Let us understand with help of the example,

Suppose you invest 100000 @ 10% in name of wife in tax free bonds and interest earned on it Rs 10000 will be clubbed but since it is tax free will not be taxed. Now further if the interest income is further invested by the wife and it will not be clubbed in your hands and if income of wife is less than basic exemption limit then will not be taxed.

3)Here is some investment list which give tax free investments;

Interest received from Tax Free Bonds

Dividends and Inflation indexed capital gains from Debt mutual Fund & MIPs & Balanced Mutual Funds

Dividends and long term capital gains from Equity oriented Mutual Funds and Stocks

4)The amount paid for life insurance premium can be invested in name of the wife also will give tax benefits.

Similarly, investment in mediclaim policy also can give benefit of tax if also made for spouse plus will also give coverage for medical emergencies.

5)Investment in PPF in name of spouse will also give benefit in taxation.

6) Going on LTA trips each year, LTA means leave travel allowance, If both husband and wife are working then by claiming exemption LTA each year they can save taxes. How ?? well, LTA can be claimed twice in a block of four years thus, both husband and wife can claim this benefit for two years each.

7) Buying a house is dream is what most of us desire. Home loan can be taken by both husband and wife in their name and as per their proportion of the share can claim deduction of interest as laid down by Income tax act. If they have 50% sharing then both can claim the interest deduction.

8) If both the spouse are earning and if suppose one has exhausted the limit of deduction u/s 80 C then other spouse can invest in the name of spouse and claim the deduction thus adding more in investment and lowering the tax burden.

9) Say you earn Rs 3 lakhs and your spouse earns Rs 5.5 lakhs per year. You invest Rs 50,000 in PPF and claim deduction, which makes your net income tax exempt. Suppose your spouse gets some deduction on EPF but is unable to make any more investments to save tax. In this case your tax savings as a couple would be higher if your spouse invests Rs 50,000 in PPF and claims the deduction instead of you. 

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