Tax planning through gift giving

Gifts give a great joy, it goes without saying. They convey your emotions to the receiver, who in turn, appreciates your sentiments. Gifts enhance relations and strengthen bonds of love. But gifts also serve a practical purpose when it comes to financial planning. You may wish to know. Let me bring to your notice that gifts can serve as a simple albeit very effective tax planning tool.

The provisions of Section 56, relating to tax on gifts, along with the basic exemption limit provisions to make your income is tax-free are applied simultaneously, to ensure tax-free income.

An individual falling in a higher tax bracket, can manage to cut down on the tax liability and increase his or her capital into tax-free income through gifts. This is essentially made possible by tax planners.

The method they follow is to make a person give gifts from post-tax capital to the parents and major children, who mostly are non-taxpayers. To double the benefit, when the recipients of these gifts invest the same, the family can earn more tax-free income.

Of course, there are certain issues, precautions and clarifications that you need to seek from your tax consultant who will address all these aspects so that you are able to put this gainful tax planning strategy through gifting into practice.

In a nutshell, gifts given to your parents and children (above 18) will not invite clubbing provisions. We shall learn about the finer aspects of tax planning and gifting in the subsequent blogs.

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Welcome 2009. Bye Bye 2008!!

You will be busy celebrating and welcoming the New Year with your friends, family and colleagues – texting and calling them as well. This also is the perfect opportunity to share our joy through exchanging wishes and gifts.

The New Year gift basket is a not to be missed ritual. Here we offer some off-beat ideas and basic suggestions for you to create a gift basket for your boss, colleagues and friends.

• Always keep the hierarchy factor in mind. For your immediate bosses, the gift basket should be a tad bigger, and the gifts, that much more expensive.
• The basket that you gift your owner or MD should be the most impressive. Come up with a bottle of his/her favorite perfume; buy a branded shirt or get a classy pen set.
• The gifts you give may not be that much more expensive than the ones you give your colleagues, but should be packed creatively and presented in person.
• Decorate the handle with a bigger bow or shinier ribbon and you’re sending a sub-conscious message about his status.
• Find out what the person likes is looking to acquire before making a choice and that person really wants to possess. It is not always about buying a costly gift.
• If you want to be conventional, stick to office essentials like deodorants, classy pens, desk-top clocks, miniature calendars, etc.
• Colleagues in your department should be given the same gifts or goodies; you can skip the other departments unless you have forged special ties with some of them.

Make an impact with an impressive gift basket and after that, no one will be forgetting you in a hurry. Last but not the least, do your bit for society, when buying your gifts. Buy some products from an NGO.