How my 18+ age kid can help me to save tax on shares, F& O?
Hello @Satish_Kukde,
Welcome to the community!
Since intraday and F&O income is taxed at slab rates, trading can be split between you and your 18+ (major) child. This way, the income gets taxed in two separate slabs instead of one, which can help reduce the overall tax outgo, provided the trades and funds genuinely belong to the respective individuals and are not clubbed.
Hope this helps.
How my 18+ age kid can help me to save tax on shares, F& O?
If your child is 18 years or older, they can legally help you reduce tax on share trading and F&O income, provided everything is done transparently and within Tax Rules. Here’s how it works in simple terms.
How Can an 18+ Child Help in Saving Tax on Shares & F&O?
Once your child turns 18, they become an independent taxpayer. Their income is not clubbed with yours, which opens up smart tax-planning opportunities.
Open a Separate Demat & Account in Child’s Name?
Your adult child can open:
· A Demat account
· A Trading account
· A Bank account linked to trading
All profits from equity shares, intraday trading, and F&O will then be taxed in your child’s hands, not yours.
Gift Money to Your Adult Child for Trading?
Yes, you can gift money to your 18+ child:
· Gift to children is tax-free
· No gift tax applies
· Amount received is treated as capital for trading
Once gifted, any income generated from shares or F&O belongs to your child.
Benefit of Lower Tax Slab for Adult Child?
This is the biggest advantage.
If your child:
· Is a student
· Has no other major income
· Falls in a lower tax tax slab
Then:
· Short-term capital gains
· Long-term capital gains
· F&O business income
May be taxed at a much lower rate compared to your slab.
F&O Income Taxed as Business Income?
Yes. Income from Futures & Options is treated as business income.
Your child can:
· Claim business expenses
· Adjust losses
· Carry forward losses if needed
· Opt for presumptive taxation (if eligible)
This gives more flexibility than salaried taxation.
Use Basic Exemption Limit Smartly?
Every individual gets a basic exemption limit.
If your child’s total income stays within:
· Basic exemption limit
· Or lower slab under new tax regime
Then overall tax outgo reduces significantly.
Important Rules to Follow?
· Trading account must be fully in child’s name
· PAN, Aadhaar, and bank details must match
· Do not use your own Demat for child’s income
· Maintain proper records of gifted funds
· File your child’s income tax return regularly
What Should You Avoid?
· Using minor child accounts
· Routing profits back without documentation
· Mixing funds between accounts
· Ignoring compliance for F&O turnover
Is This Legal?
Yes. This is completely legal tax planning, not tax evasion, as long as:
· Your child is 18+
· Income is genuinely earned by them
· Proper disclosures are made
Final Thought?
If planned correctly, an adult child can be a legitimate tax-saving support for share trading and F&O income. Always keep compliance clean and transparent to stay stress-free.
1 Like