I have sent this query to Mr. Subhash. If I recieve a reply from him, I will share it with you.

Thanks for the offer of calculating tax liability. I have sorted it out but will definitely contact you if you need any help.

Have a nice weekend....

Hi Ashal,

Thanks for your prompt response. Actually I missed one detail in my above query - my CA had suggested that I should give power of attorney to my mother and then she should get into the agreement with the tenant and recieve the rents from the tenant directly. We would continue to pay the home loan. Then my mother would not be paying the tax. Is this legal?

Thanks....

Thanks a lot for your advice and prompt respose. I will invest as suggested by you....

Hi,

I own three flats out of which is two have been rented out. I have taken bank loan for all the three flats. I have been suggested by my CA that if I want to avoid the paying income tax on the rent I can give that money to my mom who is a housewife and has no other source of income. I will continue to pay the loan but she will get the rent. Is this legal?

Thanks...

Hi,

I have heard that I can form a trust and invest money in it for my child's future. This way tax will be levied only when the money is withdrawn by my child & since he won't be earning then the amount of tax would be very low. Could you please help me by:
1) Confirming that the above understanding is correct.
2) Provide details on how the trust should be formed

Thanks...

Hi,

I would like to invest 50,000 in gold fund for a period of around 10 years. Which fund would be the best choice. Also what are the typical returns....

No. This will be considered as diversion of income. You still have to pay income tax....

Dear market man1, as far as i know, by making power of attorney in favor of ur mother, u can\\`t avoid tax on rental income. Why? because, in case of power of attorney, ur mother \\`ll act just as ur agent/legal representative to do transactions (receiving rental income in this case) on ur behalf. Ur mother is receiving the money as rent which ultimately belongs to u, as u r the owner of the house. If u r still in doubt after reading my post, plz. ask to Dear subasu, who may put more light on it, as he is the boss on taxation here at MMB. alternatively u can post ur query to Tax@moneycontrol(.)com to respected Subhash Lakhotiaji, . As i told in prev. post, u may send the details to me to calculate the exact tax liability. Thanks Ashal...

Dear marketman1, As usual, Ashal has been bang on target and given all the details on Gold funds for your investment. He deserves a Big Applause for a marvellous job done by him. Well done Ashal, as usual. Regarding The two Gold Mutual Funds that are available now for investment, i.e, DSPML World Gold Fund and AIG World Gold Fund, please that these companies invest in stocks of Gold Mining Co., and thus have a high Alpha with regard to Gold price movement. They tend to have higher volatility compared to Actual movement of Gold price. The advantage is, they are in existence for more than 10 years and have a good track record and there is no reason to believe they will not continue to give good returns in future also. Among the two, DSP/AIG, let me clarify, DSPML holds more stock of South African Mines and AIG holds more stock of Canadian Mines. As you already may be knowing, South African Mines have reached peak of the production capacities and struggling to maintain costs and thus Profit Margins which is not the case of Canadian Mines. DSPML World Gold Fund will have a good performance for next 6 months to 1 year, Later on, its performance depends on its ability to take correct calls on its holding in South African Mines. AIG World Gold Fund will not have any such tough decisions to make. So, as your investment horizon is 10 years, you can safely go for AIG World Gold Fund. You can read about these funds in more details in my previous messages or in my blog named goodfundadvisor dot blogspot dot com Invest 75% of your investment amount in Gold Funds and balance 25% in Gold ETFs. Best of luck, Regards, Srikanth...

Dear market man1, I'm shocked to read that ur CA has advised so. Ur CA is wrong. U can't avoid tax liability on the rental income by simply gifting this rental income to ur mother. the renatal income from both house 'll first be added to ur income from all other sources, u 'll get deduction property tax paid to municipality, 30% standard deduction towards maint. & upkeep of houses & the interest paid against such home loans from ur rental income, the remaining positive rental income if any 'll be added to ur income from other sources & after paying the income tax, the remaining amount is ur capital (rental income) & now only u can gift this income to ur mother or any one else as u desire. If u want a detailed calculation for urself, kindly post the following details. 1. Self occupied house - Interest paid against home loan 2. Rented house 1 - total annual rent received (mention clearly if property was on rent for a part of year & not full year), property tax paid to Municipal corporation, Interest paid against home loan 3. Rented house 21 - same info as for rented house 1 Only after getting this info i can calculate the exact tax applicable to u. Note - If u don't want to made public ur income details, in that case plz. send the info on my e-mail id mentioned at my home page here @ moneycontrol message board. Thanks Ashal ...

Dear market man1, there r 2 types of gold funds working in india now. 1. Gold ETFs - These r exchange traded funds where the underlying asset is 24 carat pure gold in physical form. these funds 'll try to mimic the returns as generated by physical gold. Benchmark, UTI, Reliance, Kotak, Quantum to name a few who r offering these funds. 2. Gold Eq. funds - These r funds where underlying asset is shares of gold mining cos. listed worldwide. these funds 'll give the returns as generated by underlying shares of mining cos. DSP Gold fund & AIG gold fund r example. Normally these indian funds 'll invest in parent funds of their respective owner (DSP & AIG in this case) where the underlying asset is shares of these mining cos. On taxation front both these funds 'll be treated as debt funds & taxed accordingly. Regarding GETFs, as i already told it 'll mimic the return (net of charges & expenses) of physical gold. Regarding Gold Eq. funds, although not assure, u may expect anywhere from 12 to 30% subject to performance of underlying mining cos. Regarding ur 50K investment split it into 2 parts of 25K each invest 1 part in GOLD ETF & another part in Gold Eq. fund (preferably DSP) by using SIP or STP thru liquid + fund of DSP. Thanks Ashal...

Dear market man1, The trust u want to form is called, " CHILDREN DISCRETIONARY TRUST". Ur understanding that till the income is not distributed among the beneficiaries of the trust (children in this case), the income 'll be charged for normal slab rates as applicable for individuals. But i'll not recommend u to go for such planning, the reason is, there is a predetermined condition for slab rate tax, this trust should be form under a will & for the children, it should be the only trust (means children should not be beneficiary in any other trust). Now comes the interesting question, if u r going to make this trust for ur children under a will, it can be made only after ur demise, when the will of urs 'll come into force. If ur parents form this trust thru their will & appoint u & ur wife as trustee, again trust can only be made at the time of settlement of will. Also if anyhow u r able to manage the trust forming & start investing, (most probably in MFs, bank FDs, NSC etc.), but if u utilize the income generated during the lifetime of trust for children's use, before the settlement of trust, the benefit of slab rate taxation 'll be gone & u'll have to pay tax on max. marginal rate. for trust's income. My advise 'll be invest under ur name with keeping an eye on taxation & invest accordingly in such instruments where tax is almost nill after a certain period of time (1 year for EQuity MFs) or lower rate of tax (like FMPs in comparison to bank FDs). I hope u 'll understand my point. Thanks Ashal ...