How to build capital in wife’s name?
I have 3 lac rupees which I wish to invest in low to medium risk instruments. Time horizon 5 years for 2 lac and 15 year for 1 lac. I am hoping every year I will have a couple of lacs to continue investing in my wife’s name. I am in 20% bracket and my wife has no capital and her income is Nil.
Now where should I invest so as NOT to envoke the clubbing provision.
I have gone throught the forums. And what I found as viable options were PPF and tax free bonds.
Now the question is, I understand the interest earned from the investment will be taxfree. But what about the capital (principal amount) on maturity.
Is this principal amount to my wife a loan or a gift? If both loan and gift are possible, which is a better option? What is the min. rate of interest at which I can give loan to my wife? And upon maturity should the original investment amount (principal) be returned from wife’s account to husband’s? Or if there are no issues if the principal amount continues to be in wife’s account and becomes her capital asset.
One more doubt. Why investing in shares or Mutual funds, if invested period is more than 1 year, is not an option.
I am not looking for options of gifting to relatives (parents, siblings) and they in turn gifting to my wife as a mode of building capital in wife’s name.
My main intention is not actually to save tax in 80c etc., but to save tax on investments. As per this years income tax slabs, 2 lac is exempt from income tax. This is what I want to utilize in my wife’s name.
Thanks in advance.