• A person falling within higher marginal tax rate bracket can exchange his income yielding assets with the non-income yielding assets of similar value of his spouse. For example when a spouse with higher marginal tax rate exchanges his interest bearing securities with his spouse (who is not within the marginal rate), in consideration of jewelry, income from interest of securities would not be clubbed with the income of spouse falling inhigher marginal tax rate.

• A male member of a Hindu undivided Family (HUF) can transfer his separate property to a trust created for the benefit of the HUF. Income arising out of such property will not be clubbed with the income of such male member.

• A person should not transfer any assets to his minor child without any adequate consideration because income from such assets is clubbed with the income of transferor. However, he can transfer an asset to a trust created for the benefit of such minor child and accumulate the income of such property to the corpus of the Trust. On attainment of major- ity, the entire amount can be transferred to the child from trust.

• If any property is transferred to the spouse before marriage without consideration, income from such property shall not be clubbed with the income of individual after the marriage.
  
  Cross transfer of assets to the spouse of any other person, in consideration of transfer of any assets (of equivalent value) by such other person, to the spouse of the first person, will not be clubbed with any individual.

• For example, consider two individuals A and B who fall in the highest tax bracket, but their wives do not fall under the tax net. A transfers his house property valued at Rs.5,00,000/- (annual income Rs.50,000/-) to the wife of B. B in turn trasfers his 10% fixed deposit of Rs.5,00,000/- to A's wife. Income of both the wives will not be clubbed with the income of their husbands.

House Property

• Only one house used for residential purposes is exempt from tax. Hence if any person is in possession of more than one house, he should opt for that house for self-occupation, whose annual value is highest.

• It is advisable to keep the house property for more than 3 years, before selling. Then it will be considered

• as a long-term capital asset and the owner will get the benefit of indexation on sale of the property.

• When a residential property is jointly acquired, say, by your spouse and yourself, then the tax benefits will be separately available to both of you. If any loan has been availed jointly for acquiring the house, then the tax deduction on interest on the loan can be availed by both the joint owners of the house (in the ratio in which they have shared the loan).

• An amount equal to one fourth of the annual value of the property is deductible from tax as an amount spent on repairs and collection of rent. There is no need to keep the bills, records etc.