Investing in your mother’s name can lower tax outgo. But be wary of 2 things.

It can be

If your parent falls in a lower tax bracket or has no taxable income, investing in an SIP in their name can be a smart move. It will minimise your tax outgo.

Good option for…

It can be especially helpful for those in the highest tax bracket.

There are risks, though

Let’s look at the two types of risks.

Risk of income clubbing

If your mother returns the invested money later, the tax authorities may view it as a form of income clubbing. This means the money gets added to your income and is taxed.

Second risk is to do with estate planning

Click on the link below to find out why your siblings may stake a claim to the money that you gifted your parents.