Skip to main content

Tax benefits for children

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

Let us look at some of the deductions we can claim for investments made in children's names. Most of these deductions fall within the investment limit of ₹ 1 lakh, under Section 80C.

Tuition Fees Paid: In respect of school fees a parent can claim a deduction of tuition fee paid to any university, college, school or any other educational institution. The deduction on payments made towards tuition fee can be claimed up to ₹ 1 lakh together with deduction in respect of insurance, provident fund and pension. It can only be claimed in respect of two dependent children and for fees to an educational institution within India and for tuition fee only. Interest on Education Loan : The cost of higher education is often a burden on the family's budget and parents are forced to borrow for their children's education. The interest paid ( not the principal amount) on an education loan is fully deductible from taxable income under Section 80E up to eight continuous years, starting from the year in which the interest is first paid. This can be claimed by either the child ( if the loan is in their name) or by the parent.

Premium paid for health insurance:

Parents can claim a deduction up to a limit of ₹ 15,000 on premium paid towards health insurance policies taken for their children.

Tax benefits for certain ailments

The treatment of a chronic illness can be a drain on the finances of a family. This is why the Income Tax Act allows a deduction of ₹ 40,000 if one has a dependent child who suffers from any of the ailments specified under Section 80DDB, provided the child does not separately claim any deduction towards the same ailment.

Aliments for which tax breaks

are available are few: Neurological diseases ( like Dementia, Dystonia Musculorum Deformans, motor neutron disease, ataxia, chorea, hemiballismus, Aphasia, Parkinson's Disease), cancer, full blown acquired immune deficiency syndrome ( AIDS), Chronic renal failure, hemophilia and thalssaemia.

Disabilities also eligible for

deduction: If one has a disabled dependent, one is eligible to claim ₹ 50,000. The deduction is available only if the impairment is at least 40 per cent and if the disability is severe ( 80 per cent or above), the deduction is ₹ 1 lakh a year. Incidentally, the deduction is offered as a lump sum and is irrespective of the actual amount that the taxpayer may spend.

To claim this deduction, under Section 80U one must furnish a copy of the certificate issued by the medical authority in the form and manner, as may be prescribed. Medical Authorities means any hospital or institution specified in Persons with Disabilities ( Equal Opportunities, Protection of Rights and Full Participation) Act, 1995.

Such Medical Authorities are prescribed from time to time by Government Authorities.

Hostel Allowance ₹ 300 per month per child up to a maximum of two children is exempted ( only if expenses are incurred in India) Education Allowance ₹ 100 per month per child up to a maximum of two children is exempted ( only if expenses are incurred in India)

Medical Expenses

Reimbursement Deduction of up to ₹ 15,000 per annum is allowed. This can be claimed for self as well as for children who are dependent. Medical bills have to be furnished to avail this benefit.

Free/ Concessional Educational

Facility: Deduction to an extent of ₹ 1,000 per month is allowed provided the educational institution is maintained and owned by the employer or any other educational institution by reason of his being in employment of that employer.

Setting up a Trust: One can save taxes by creating a trust for children.

One needs to make an irrevocable transfer to the trust, where money cannot be claimed back by the donor. All investments are made through the trust and the income generated can only be used in accordance with the purpose of the trust. The income from the investments is not clubbed with the donor's income, but the trust needs to pay tax. This method helps reduce the tax liability.

Gifts: Any gift received in cash or kind exceeding ₹ 50,000 is taxed in the hands of the recipient. However, this rule does not apply to gifts received from relatives and received on the occasion of one's marriage or under a will or inheritance.

Any transfer of money or of movable or immovable assets, is considered as a gift. Though there is no tax on gifts, all gifts in excess of ₹ 50,000 (other than those from relatives) and income generated through them get clubbed with the recipient's taxable income. However, income earned by assets gifted to minor children are included in the income of the donor for taxation. If you want the money earned to be treated as independent income of your minor children you will have to prove that the recipients had used their own acumen for making money from the gifted assets.

By utilising these tax breaks given by the income tax department, it is possible to further reduce one's tax burden. However, only one parent can claim these benefits - not both.

Summary:

One can deduct their children's education expenses, and medical bills against their taxes [1]A dependent child's income will be clubbed with yours unless it can be proved that the child has earned the money in his or her own right [1]Setting up a trust for your children is a tax efficient method of investing on their behalf [1]Only one parent can claim deductions for the children, not both

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax PlanInvest Online
  2. HDFC TaxSaverInvest Online
  3. DSP BlackRock Tax Saver FundInvest Online
  4. Reliance Tax Saver (ELSS) FundInvest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) FundInvest Online
  7. SBI Magnum Tax Gain Scheme 1993Invest Online
  8. Sundaram Tax SaverInvest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver Mutual Funds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

How to generate a UAN Online

Best SIP Funds Online   In order to make Employees' Provident Fund (EPF) accounts portable, the Employees' Provident Fund Organisation (EPFO) had launched the facility of Universal Account Number (UAN ) in 2014. Having a UAN is now mandatory if you have an EPF account and are contributing to it. So far, you got this number from your employer and every time you changed jobs, you had to furnish this number to the new employer.  However, in order to make it easier for you to get a UAN , and without your employer's intervention, the EPFO now allows you to go online and generate a UAN on your own. This facility can be used by freshers, or new employees, who are joining the workforce as well as by employees who have older EPF accounts but do not have a UAN as yet. As a new employee, you can simply generate a UAN and provide the number to your employer at the time of joining, when you need to fill up forms for your EPF contribution. As per a circula...
Read more

Reliance Regular Savings Fund - Debt Option

Reliance Regular Savings Fund - Invest Online     The scheme aims to generate optimal returns consistent with moderate levels of risk. It will invest atleast 65 per cent of its assets in debt instruments with maturity of more than 1 year and the rest in money market instruments (including cash or call money and reverse repo) and debentures with maturity of less than 1 year. The exposure in government securities will generally not exceed 50 percent of the assets. The fund uses a mix of relatively low portfolio duration with active investments in higher-yielding corporate bonds. It does not take aggressive duration calls but tries to improve returns by cherry-picking corporate bonds. This is reflected in the fund's returns matching the category and benchmark for five years - at 8.4 per cent - but lagging behind the category during a raging bull market in bonds in the last one year. The fund has been a consistent but not chart-topping performer in the income category. Despite its ...
Read more

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...
Read more

IIFL NCDs

Buy Gold Mutual Funds Invest Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Call 0 94 8300 8300 (India) IIFL NCDs IIF's six-year unsecured NCD 2012 Risk-wary investors should stay away from this issue, and even, risk-taking ones should think twice It is a public issue of unsecured redeemable non-convertible debentures ( NCDs ) by India Infoline Finance ( IIF ), an unlisted company, which is a 98.9 per cent subsidiary of India Infoline, a listed company. The issue seeks to raise Rs 250 crore with an option to retain over-subscription up to Rs 250 crore taking the total potential issue amount to Rs 500 crore. It will be open for public subscription from September 5 to September 18 with a minimum application size of Rs 5,000 in the form of five NCDs of face value Rs 1,000, TENURE & RATES: IIF will redeem the NCDs at the end of six years, and investors wanting out before six years will be able to sell the...
Read more

How to Decide your asset allocation with Mutual Funds?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India) How to Decide your asset allocation ? The funds that base their equity allocation on market valuation have given stable returns in the past. Pick these if you are a buy-and-forget investor. Small investors are often victims of greed and fear. When markets are rising, greed makes the small investor increase his exposure to stocks. And when stocks crash to low levels, fear makes him redeem his investments. But there are a few funds that avoid this risk by continuously changing the asset mix of their portfolios. Their allocation to equity is not based on the fund manager's outlook for the market, but on its valuations. Our top pick is the Franklin Templeton Dynamic PE Ratio Fund, a fund of funds that divides its corpus between two schemes from the same fund house-the...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now