Less known ways to manage Income tax India

I was searching for some ways to manage my taxes and I found some  ways to manage my taxes.

These are not routine ones that’s why I wanted to list them so that others can benefit. All these come with points to be kept in mind, before using.

HUF

(Hindu Undivided Family) This is specific to Hindus. A married person can create a HUF and can receive Rs 50000 max as gifts per year into it in the form of gifts.

The process to open a HUF is as follows

Get a PAN card. For this one can apply online with relevant proofs. Card will be sent directly by post by NSDL.

Karta should get a Stamp made stating that he is the Karta of the HUF. He has to use this any time he transacts in the name of HUF.

Then open an account in the name of HUF in any bank. Then route the gifts into that account. The money can be invested similar to any other person.

Karta Can also take loan for any purpose with valid proof and manage such funds.  Also any ancestral property can be kept under HUF and the income can be accounted under HUF.
Advantage with HUF is additional PAN card which helps in reducing tax out go.

Gifts from Relatives

Gifts from blood relatives are tax free in the hands of receiver. Thus, if one takes gifts from parent brothers etc, if one maintains proof, the gift money can be shown to be tax free.

Adult children

Adult children can be used as a good tax saving tool. In fact, with proper management, an adult son/daughter can act as an earning member even if she/he is not earning. Gift some money to them and get it invested in their name. Thus one can get tax advantage and also one can initiate adult son into the wonderful world of finance.

There is one more issue here. Adult in Indian context is one who completed 18 years. For income tax purpose, even if one is becoming adult, he will be treated as adult for that whole year. Thus if one is completing 18 by say Feb 28, he can get money and act as an adult from April 1^st onwards. This can be used by a parent for managing tax.

Parents

If parents are not in taxable limit, this also can be taken advantage by gifting them and investing on their behalf. Online banking facility will further ease the process.

Will update this list in a future post.