To reduce income tax burden, can I transfer fixed deposit to my wife (housewife) and student-children (above 21 years old) and ITR return separately on their individual names, even though we all live together in a single flat.
As per Income tax rules, if you transfer your money to their name, income generated on this will be clubbed with your income, these are called clubbing provisions.
So, even if you make FD on your wife name, income on it will be clubbed with your income and you will be liable to pay income tax on it.
GST Payer's answer is correct.
Laws get evolved over the period of time and people were transferring assets on name of relatives to save tax and thus clubbing provisions were introduced.
However you can save very little by opening a PPF account on your wife name. But you can deposit only Rs. 1.5 lakhs in a year. Interest and maturity amount are tax free on PPF.
Further you can take LIC on her name which again tax free. Actually you can take benefits under section 80.
If you are under job then already your 80C limits must have exhausted by your PF deduction. You can start investing by selecting investments from 80C on your wife name.
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