This Valentine’s Day, help your partner save more on taxes

Pyaar mein sab jayaz hai?

Emotionally and financially, may be jayaz but tax laws have different provisions.?

Emotionally, jo mera hai wo tera hai?

Financial planners reason that couples should ideally combine their finances. The meshing together of the investments of husband and wife not only strengthens the household's finances but gives them a comprehensive view of their financial situation.?

However, the government has set limits to this merging of finances between spouses. There is no problem if one spouse gives money to the other. After all, it’s their money and spouses are on the list of specified relatives to whom you can gift any sum without attracting a tax.?

Gifts given by blood relatives are not taxable. However, gifts to spouses and minor children will attract clubbing provisions as specified earlier. Also, gifts received on certain occasions, such as marriage and religious ceremonies, are exempt as well. If, however, the value of the gifts received in your marriage is inordinately high and not commensurate with your lifestyle, the government may want to know who the generous givers are.?

Give a loan to your spouse instead of a gift?

Giving loans to the spouse at fixed deposit rates can help avoid the clubbing together of income. The loan amount can be used to:?

1) Pay the downpayment for the purchase of a house. The interest paid on the loan can be claimed as a tax deduction?

2) Invest in mutual funds or stocks and take benefit of tax free capital gains of up to Rs 1 lakh per annum?

3) Physical gold or gold ETFs?

The receiving spouse can repay the amount whenever there is an income from the investment.?

If you want to save tax, you can:?

1) Buy life or health insurance for the spouse and save tax by claiming a deduction under Sec 80C or 80D?

2) Take an education loan for the higher education of your spouse and claim a deduction of the interest under Sec 80E?

3) Pay salary to spouse if working in business and claim a deduction for the amount.?

Not yet married? You can still save on tax?

If you plan to gift your fiancee an expensive diamond ring on Valentine's day, we suggest you wait till the knot is tied. Gifts and cash received from unrelated persons are tax-free only up to Rs 50,000. If the value of gifts from unrelated persons exceeds Rs 50,000 in a year, the entire amount will be taxed. The amount is to be shown as income from other sources in the tax return form.?

Your gift might evoke mixed emotions in your fiancee-she will love you for your generosity but might hate you for your thoughtlessness on tax matters.?

Here’s a small hint: gifts received on marriage are 100% tax-free, so wait for the celebration day.