Query: I want to invest in my wife’s name since she doesn’t pay tax (or is in lower tax bracket). Is it OK?
Hum Fauji: If it is your money (salary, retirement corpus, some earnings exclusive to you etc) and you invest in your wife’s name, the gains arising from investments will be clubbed with your income as per Income Tax Section 60-64 and taxed in your hands. Hence, there is no benefit for you.
In case you invest in the name of your major children (18 years+) or parents, you can officially gift the amount to them including on a monthly or regular basis (say, for SIP of mutual funds) and support the investment with a gift deed. But please note that you cannot take the money back later for your own requirement since that will be counted as ‘round-tripping’ for tax avoidance.
(Query answered by Priyadarshini Das, Financial Planner at Hum Fauji Initiatives)