Loan to your spouse — invest without the clubbing trap

The idea

Income from an asset gifted to a spouse is clubbed with yours (Section 96, old 64). But if you lend — a real loan at a reasonable rate, properly documented — the spouse invests with borrowed money and the investment income is taxed at their slab.

Do it right

• A written loan agreement, a reasonable interest rate, and interest actually paid.
• The interest you receive is taxable to you — but the larger investment income sits at the spouse's (often lower) slab.

An established, if technical, way to split investment income between spouses. Keep it genuine.