Income Tax on Fixed Deposits

Dear Sir,I am salaried person of a PSU and Tax payer in the bracket of 30%.I want to invest Rs 50000/- in fixed deposite in view of increased interest rates.However, to save the tax on the interest earned on proposed Fixed deposite, i want to buy it in the name of my spouse who is a house wife and have PAN Card.So i am planning to buy the FD in her name for a period of one year and submit her IT return as individual.I request you to kindly advise me whether it is allowed as per Income Tax Act.Regards Sanjeev

Dear friend, As u told, u r in 30% Tax slab, I assume to avoid Tax on FD interest, u r planning to invest in ur wife’s name. My dear friend Tax evasion is not legal. My dear friend, u can’t avoid it, as the income generated from any cash amount gifted to spouse, ‘ll be clubbed with income of original person whose money was it, Under clubbing of income provisions of Section 64. If u do want to take benefit of high interest rates with low tax on it, plz. invest in FMPs (Fixed maturity plans) of MFs of duration 1Y & more.Due to indexation benefit, ur net tax liability on gains from such FMPs ‘ll be far less than what u ‘ll pay as tax on bank FD interest.
Ashal …

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