Do you think sometimes how supportive your family is? Yes indeed! Everyone is there emotionally for you always. Sometimes they can be supportive financially also! For instance, your family members can be of great help for saving taxes. All investments and expenditures for your family are not eligible for tax rebates but here are some ways your family can help you to cut your tax burden in India:
Buying health insurance for the family: A health insurance policy is a necessity today because of rising expense of medical treatment and it helps you to save taxes. Under Section 80D, a deduction of Rs 25,000 can be claimed for the health insurance premium for yourself, spouse and your children. If individual or spouse is more than 60 years old, the deduction available is Rs 30,000. An additional deduction for insurance of parents is available to the extent of Rs 25,000 if they are less than 60 years old and Rs 30,000 if parents are more than 60 years old. This deduction is available irrespective of whether the parents are financially dependent on you or not.
Medical check-ups: You get tax reduction on preventive health check-ups annually. Several hospitals and clinics offer preventive health check-up packages. Within the aforementioned limit of Rs 25,000 (or Rs 30,000 all things considered) under Section 80D, you can also claim expenses incurred for preventive health check-ups up to Rs 5,000 for each budgetary year. It can be claimed for you, your spouse’s and your children’s health check-up and can also be claimed for health check-up of your parents.
For uninsured super senior citizens (more than 80 years old) medical expenditure incurred up to Rs 30,000 shall be allowed as a deduction under section 80D. These amounts however are within the overall limit of section 80D. You can get both medical insurance as well as preventive health check-up but the total deduction cannot exceed the amounts specified above.
Child education plan & investment in child’s name: Child education plan is a combination of insurance and investment that ensures a secure future for your child. Life cover is available as a lump sum payment at the end of policy term. These plans also provide flexible payouts at important milestones of your child's education. You can buy a child plan from an insurance company. The premium paid by you for your child's future qualifies for a deduction under Section 80C of the Income Tax Act. You can consider to invest in Sukanya Samriddhi Account which is a Government of India backed saving scheme targeted at the parents of girl children. The scheme encourages parents to build a fund for the future education and marriage expenses for their female child. The deposits in the account are eligible for tax deduction under Section 80C. If the parents make an investment in the child's name in Equity Linked Savings Scheme (ELSS) or PPF, the parents get the tax benefit and the taxable income gets reduced by the amount invested. Under Section 80C, you can claim a deduction of up to Rs 1.5 lakh for you and your child together.
There is also a small deduction available in case you invest in a taxable investment in the name of the child. In that case, you can claim an annual exemption of Rs 1,500 per child under Section 10 (32) of the Income Tax Act. If the interest income in a year is Rs 5000, you can claim exemption up to Rs 1,500 per child for a maximum of two children and add the balance of Rs 2,000 only to your income if you have two children. To simplify again, this also means you can invest Rs 15,000 (or Rs 30,000, if you have two children) in an investment scheme which gives an annual return of 10%, and be exempt from tax.
Tuition Fees of Children: Any sum paid as tuition fees (excluding payment towards development fees/donation/similar nature payment) to any university/college/educational institution in India for full time education of any two of your children, is deductible under section 80C. This is an expense that you have already incurred and you can claim it in your return and save tax.
Rent payment to your parents: If you are a salaried taxpayer and you live with your parents, you have the option of paying them rent and claim tax exemption on the rent amount under your HRA (House Rent Allowance). This amount will save you from taxes but will surely be added to their taxable income. But if you think practically, they can save the money being taxed by further investing their money into a tax-free plan of their own.