Tax: Cut tax by investing in child's name

Source: ET Wealth – Dec 27, 2010 : How to cut tax by investing in spouse's name   ·         If investments are made in the name of minor children (below 18 years), the income earned from such investments is clubbed with that of the parent who earns more. ·         Earlier, you could avoid this tax by investing in a long-term deposit which would mature when your child turned 18. But this rule changed a few years ago. Now, the interest earned on fixed deposits and bonds is taxed every year even though the investor gets it on maturity. So, opening fixed deposits in the name of minors makes little sense any more. ·         Open a PPF account in the name of the child because, as mentioned earlier. However, the contribution to your own PPF account and that of the child cannot exceed the overall limit of Rs 70,000 a year.