One of the well-known
tax saving methods is tax planning through creation of Wills.
It can be utilized for lawful tax saving in different ways like
transfer of wealth or assets to minor children or grand children
or creation of new Hindu Undivided Family (HUF) etc. Will read
with the Indian Succession Act, 1925 means the legal declaration
of the intention of testator (the person who has made a Will)
with respect to his property which he desired to be carried
into effect after his death.
All properties, movable and immovable, of which the testator
is owner and which are transferable can be disposed by a Will.
Wills made by Hindus, Jains, Sikhs, Christians, Jews and Parsis
must as a matter of rule be in writing. Muslims are permitted
by their personal law to make an oral Will. If the testator
changes his domicile or his nationality or the place of his
residence to a country outside India, still the law applicable
would be the Indian law. Where a person has immovable property
in one country and a domicile in another, it is advisable for
him to make two Wills.
There is no particular form of Will prescribed by law. The language
should be easily understandable and the wording is such that
the intention of the testator can be known therefrom. The person
who prepares the Will can change it at any time during his lifetime.
In other words, if he changes his mind in favour of some other
persons, he is at liberty to do so. It is a confidential document
which the executant is never ordered to produce.
Procedure:
It is not necessary to execute a Will on a stamp paper. There
is no stamp duty on a Will. It can be made on any plain sheet
of paper. It is preferable to have it in typed form. The registration
of a Will is not compulsory, as it is totally optional. But
it is always advisable to get it registered with the appropriate
authority to have a better evidentiary value.
Two or more witnesses must attest the Will. The selection of
the witnesses assumes importance for the reason that the attesting
witness may on some future occasion be required to appear as
a witness in Court in order to prove the execution of the Will.
After a Will has been executed it may be deposited in safe custody,
such as with a solicitor or a banker, including a lawyer. Under
the Indian Registration Act, 1908, a registrar also has authority
to receive and keep in deposit Wills presented to him for that
purpose. He would make an entry in the book recording the fact
that the Will has been deposited.
A Will is liable to be revoked or altered by the maker of it
at any time when he is competent to dispose of his property
by Will. If there are more than one Will, the last Will in time
would prevail. No stamp duty is payable irrespective of the
value of the property. Stamp duty is attracted on the transfer
of property, but not on the inheritance of property.
One can resort to tax planning through execution of a Will especially
with the clubbing provisions becoming applicable in respect
of the income of minor children. Any income of minor child from
assets inherited from any person will now be subject to the
clubbing provisions. This can be avoided by creating a trust
through the Will for the benefit of one's own minor children.
The income in such a case accrues to the trust and not to the
minor beneficiary. As a result, the clubbing provisions of Section
64(1A) shall not apply. |
