Tax Saving Tips in 2025 | Clubbing of Income Explained | CA Rachana Ranade

"Instead of that, if she invests that money in a PPF, what will happen? Let's understand. Did he gift that money to his wife? Was this inadequate consideration? Yes. Ideally, will that be clubbed up under Chandu's name? Yes, Agrade. So what has happened? She invested that money in PPF. Will she get interested in that? Yes. Will that interest get clubbed up in Chandu's hands? Yes. But interest on PPF is tax free. So, anyway it will be as good as Chandu will not have to pay any tax on that amount."

"The biggest part is that Section 64 clubbing applies only in case of minor children and in case of spouse does not apply if your child is 18 years or above. So in case of major son and daughter, whatever income is generated from such assets which are transferred without adequate consideration, that income will be taxed in the hands of children."

"Section 64 clubbing is not applicable to income generated in case where you are transferring assets to your parents and even if it is your parents in loss basically. Ok? So, in that case, the income will be taxed in his dad's name if he does not have any other income."

"you have to ensure that if you are doing that for your parents or your income ensure that they are at a tax slip lower than yours then it makes sense."