Skip to main content

Parents can help to Save Tax

Save Tax Get Rich
 

If your parents' income is below the basic exemption limit or in a lower tax bracket, while yours is in the higher bracket of 30%, you can earn tax-free income by gifting them money and investing it. The exemption limit for senior citizens (above 60 years) is `3 lakh and for super seniors (above 80 years) it is `5 lakh.

Also, unlike investments in the name of a spouse or a minor child, there is no clubbing of income for parents (in come they earn will not be clubbed with your income and taxed). So, a parent can essentially earn a tax free income of `3 lakh. If they in vest in a tax-saving scheme un der Section 80C, they can earn up to `4.5 lakh a year without paying tax.

INVEST IN THE PPF IN THEIR NAME

If you exhaust your Section 80C limit of `1.5 lakh by investing in other avenues, you can invest in the Public Provident Fund account of your parents and earn tax-free income. The current interest rate for the PPF is 8.1%. In fact, you can deposit `1.5 lakh in each of your parents' names and claim `3 lakh as deduction, which can earn tax-free income.

INVEST IN TAX-FREE BONDS

You could also invest in long-term tax-free bonds in your parents' name. These are for the long term (10, 15, 20 years) and interest income is tax-free. This interest can be invested by the parents in other saving schemes like the Senior Citizen Savings Scheme, which offers 8.6% interest, to lower tax liability.

TRADE IN STOCKS IN PARENTS' NAME

If your parents' income is less than the basic exemption limit of `3 lakh, the short-term capital gains will not attract 15% tax. So you can open a demat account in their name and trade in stocks.

OFFSET CAPITAL LOSSES

If you have incurred long-term capital losses, you could offset them against long-term capital gains by making an off-market transaction. Since it's difficult to find off-market buyers, you could sell the shares to your parents and offset your losses.

PAY THEM RENT AND CLAIM HRA

You could lower tax liability if you are living with your parents and the house is registered in their name. If you are salaried and receive house rent allowance, you could pay them rent and claim tax exemption. Make sure that your parents' income is below the basic exemption limit to avoid raising their tax liability.

HEALTH INSURANCE PREMIUM

If you buy a medical insurance policy for your senior citizen parents and are paying the premium, you can claim an exemption of `30,000 under Section 80D.

MEDICAL TREATMENT DEDUCTION

You can claim `60,000, or amount actually paid, whichever is lesser, as deduction for medical treatment of your parents if they suffer from specified diseases (such as Parkinson's disease, dementia, cancer, etc.) under Section 80DDB.

-----------------------------------------------
Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

Top 10 Tax Saver Mutual Funds to invest in India for 2016

Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. Franklin India TaxShield

4. ICICI Prudential Long Term Equity Fund

5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

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

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

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

Popular posts from this blog

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...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...

Mirae Asset Emerging Bluechip Fund

Start Saving for Tax 2018 by Investing in ELSS Funds Online HOW HAS THE Mirae Asset Emerging Bluechip Fund PERFORMED?   With a 7-year return of 25.08%, the fund has outperformed both the category average return (18.04%) and benchmark (13.4%) by a wide margin.   Growth of Rs 10,000 vis-a-vis category and benchmark   Mirae Asset Emerging Bluechip Fund   is a mid-cap oriented fund continues its stellar run, clocking another year of outperformance over benchmark and peers—a feat it has achieved every year since inception. The fund manager plies a strictly bottom-up approach to stock selection and keeps risk contained by focusing on larger mid-caps. A year ago, it had stopped accepting lump sum investments and now the fund has also put restrictions on SIP investments—only allowing SIP on the tenth of every month with an upper limit of Rs 25,000.   It has done so to preserve its return profile in the face of mounting inflows and stretched valuations in the mid-cap space. This step should hel...
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