Topic: I have surplus funds available which I want to invest in fixed deposits

As I am in highest tax bracket so I want to invest the amount either in my wife’s name or in the name of my minor son, the only thing that needs to be considered here is that my wife also have some taxable income but she does not fall in highest tax bracket.

No matter in whose name you invest the surplus funds lying with you, the interest income on the FD’s shall be added to your income, as in both the cases clubbing provisions shall apply. Lets take both the cases one by one:

* In case you invest in your wife’s name: As per section 64(1)(iv) what ever income that will accrue to your wife from funds received from you shall be clubbed to your income. However since your wife does not fall in highest tax bracket and if she have surplus funds available in her name (out of her earned income) then it would be better that instead of you she invest in fixed deposits.
* In case you invest in your minor son’s name: As per section 64(1A) what ever income that will accrue to your minor son from funds received from you shall be clubbed to your income (Income of Minor child is generally clubbed with the income of the parent whose total income is higher, like in your case your total income is higher than that of your wife thus clubbing shall take place in your hands). However from the income so clubbed you shall be entitled to exemption of Rs.1,500.

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