A. I work as a remote freelancer for different foreign clients and have the option to receive payments in any bank account in India.
Can I receive some salary in my family member’s bank account to avoid the 50 Lakh 44ADA limit? Is it legal?
What if I form HUF or partnership and receive a salary in that account? Is it legal?
B. I also trade in the stock market. Let’s assume I will have a very successful FY 21-22 in the stock market.
Can I create a bank/broker account on behalf of my family members (sibling, mother) and trade using it by transferring money from my bank account to there and from there to the broker’s account? This way I will get lower tax slabs since they earn less very little money. Is it legal?
Yes, you can form a HUF and Partnership and receive the amount in the form of Business or Profession Income. HUF/Firm cannot take salary.
Tax evasion refers to a situation where a person tries to reduce his tax liability by deliberately suppressing the income or by integrating the expenditure showing the income lower than the actual income and also resorting to various types of deliberate manipulations.
The line of demarcation between Tax Planning and tax avoidance is very thin. It is usually done by adjusting the affairs in such a manner that there is no infringement of taxation laws and by taking full advantage of the loopholes in there in so as to attract the least incidence of tax. Earlier tax avoidance was considered completely legitimate but at present it may be illegitimate in certain situations.
As I understand there are multiple foreign clients - You can split the clients between you and HUF/Partnership instead of 50%-50% invoices between you and HUF/Partnership of the same client.