Hi all, i have a query. If i have some capital, lets say 30 lacs which is my earned money i am trying to put in market.
My question is, can i give this to my family members (spouse and senior citizens parents, 10 lac each) and trade on their name. Is it legally allowed? Would this trigger any tax scrutiny especially on my senior citizen parents account as their bank account are not exposed to trading till now.
You mean, it’s your money, which you would give to your family, considered as gift, and demat accounts will be opened in their names, and once the funds are transferred to their accounts, you will trade in all of their names, but technically they are trading, and as such, the profits or losses are theirs and returns will be filed.
And why is that you are thinking of this particular scenario? Is it because you are already in the 20% or 30% profit, and as such, any gains if made in your account will be added to your earnings and you will pay more tax?
Well if the gift amount is invested in interest bearing instruments, the returns from such have to b clubbed with your income. But if it’s only trading then I suppose that’s okay (assuming they are trading )
Give this amount as a loan to them, (Your accountant/CA will show this as loan in the Balance Sheet.) Do trading, make profit, file IT Return of your Parents, Spouse, etc. Get some amount back to your account as repayment of the loan shown earlier.
If you will gift this amount to them , then it will attract the clubbing of income rules. Better avoid it,