Can Trust Be Created By Transferring Income From Property And Not The Property ?
November 1, 2008 by taxworry · Leave a Comment
Is it possible that assets remain under my name but the income received is transferred to the trust and taxable in trust name? Ranjan Gumnani
Creation of trust by transfer of income of a property and not the property is possible , but it will not give any tax benefit because section 60 of the I T Act provides that in such case income so transferred to the trust shall be considered as income of transferor only. Read the relevant provision below
60. All income arising to any person by virtue of a transfer whether revocable or not and whether effected before or after the commencement of this Act shall, where there is no transfer of the assets from which the income arises, be chargeable to income-tax as the income of the transferor and shall be included in his total income.
Therefore, when a private trust is created then attention should be given to see that there is actually transfer of asset to the trust and ownership on the asset should not remain with the transferor (Settler )
Relevant Readings
How To Tax Plan Through Private Trust?
How A Private Trust Can Help Your Daughter,Handicapped Dependent or Wife ?
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