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How To Avoid Clubbing Of The Wife’s Wealth With That Of The Husband’s In Case Of NRI

[How an NRI can Avoid Clubbing of his Incomes and Wealth with that of his Spouse and Children]

The provisions of clubbing of income of certain close relatives for the purpose of income tax, as discussed are equally relevant for the purposes of wealth tax. Hence, a non-resident Indian, like any other resident person, should so adopt proper tax planning that there is no clubbing of wealth of his wife with his own wealth. Thus, he should refrain from making any gift whether out of assets outside India or assets in India to his wife. That is why the wife of the non-resident Indian should also not make any gift of any assets, whether out of funds in India or funds outside India to her husband. Likewise, the nonresident Indian should not make any gift of any property in favour of the daughter-in-law or to any trust in favour of or for the benefit of the daughter-in-law. If these precautions are taken, the gifted assets are not to be clubbed with the assets of the person making the gift under the provisions of Section 4(1) of the Wealth Tax Act. This aspect of tax planning is very relevant for saving wealth tax and particularly for saving oneself from the clubbing provisions of wealth tax. Of course, the taxable wealth of a minor child would be clubbed with the wealth of the NRI under Section 4(1) of the Wealth Tax Act from the Assessment Year 1993-94. Usually, it is seen that a non-resident transfers certain amount of money out of his own funds in favour of his wife and minor children, under the impression that each one of them would be liable to wealth tax independently. In particular he is under the impression that for seven years there is complete exemption of the assets from the payment of wealth tax if he returns to India permanently. Though this is true, after the end of the seven-year period the transferred assets in favour of wife and minor children would be liable to be clubbed for the purposes of wealth tax in his hands.
 
How an NRI can Avoid Clubbing of his Incomes and Wealth with that of his Spouse and Children !
1. Income From Joint Accounts Or Joint Investments by NRI : Is it Liable To Be Clubbed For Tax Purposes in case of NRI ?
2. When is the income of wife liable to be clubbed with the income of her husband, and vice versa ? in case of NRI
3. When is the income of a Minor Child liable to be Clubbed with that of a Parent in case of NRI ?
4. When is the Income of Daughter-In-Law Liable to be Clubbed with that of her Father-In-Law or Mother- In-Law in case of NRI ?
5. Income of a Major Child cannot be Clubbed with that of his Parent in case of NRI
6. When is the Income Of An HUF From Self-Converted Assets Liable To Be Clubbed In The Members’ Hands in case of NRI ?
7. When is income from Assets Received on Partial Partition of an HUF liable to be Clubbed with the Income of the HUF in case of NRI ?
8. Joint Ownership Of House Property: Does It Make The Income Of A Husband, Wife, And Children Liable To Be Clubbed Together in case of NRI?
9.  How To Avoid Clubbing Of The Wife’s Wealth With That Of The Husband’s In Case Of NRI
10. Gift From Non-Relatives Now Taxed As Income In Case Of NRI

More... Topics !..

 

Tax Guide for NRI - Tax Planning, Tax Saving, Investment Guidance for Non-Resident Indians !

1. Basic Aspects Of Tax Planning For NRIs
2. How an NRI can Avoid Clubbing of his Incomes and Wealth with that of his Spouse and Children
3. The Incomes of an NRI completely Exempt from Income Tax
4. Capital Gain of an NRI could be Completely Exempt from Income Tax
5. Items completely Exempt from Wealth Tax for an NRI
6. Special Procedure of Assessment regarding Income of an NRI from Foreign Exchange Assets
7. Deductions Allowed to NRIs in the Computation of Total Income and Tax Payable
8. Procedure for the Filing of Income Tax and Wealth Tax Returns, Assessment, and Refunds
9. Gifts by NRIs to Relatives and Friends can be made fully Exempt from Gift Tax
10. FEMA and NRIs Preliminary Aspects Analysed
11. Acquisition and Transfer of Immovable Property in India by NRIs and FEMA
12. Permissible and Prohibited Current Account Transactions in Case of NRI
13. Investment In Shares, Securities, Units And Other Activities, etc. by an NRI in India
14. Deposits in India by an NRI
15. RFC account of a Returning NRI and Investment Abroad
   
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