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Safeguards from clubbing of minor income

June 24, 2016 by Sudhir Kaushik

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You have to declare and pay tax on your child’s income within your income tax return. In case your minor child is earning from his/her own capacity, then the minor child can file his/her own return and there will not be any clubbing of income. To avoid clubbing of your child’s income, you may invest in tax free instruments such as PPF, MF or ULIP. Plot and Gold are other assets where money can be invested in as there is no tax on holding gold. Gold can also be used as a security to raise funds for emergency family needs. To buy a house, you can mortgage gold and take a loan. Interest paid on this loan can be claimed as deduction from your house property income. This is specifically useful for house which is not easy to mortgage. Therefore we recommend you reduce your tax liability by purchasing gold as compared to NSC/FD in your child’s name. Private trust can also be created to save tax.

Filed Under: Tax Refunds

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