In case you invest in the name of your minor child, the income earned will be clubbed with your income and taxed under the clubbing provision. However, you can avail of a small exemption of Rs. 1500 per child for a maximum of two children per Financial Year. This means you can invest even in Bank Fixed Deposits / Recurring Deposits in the name of your minor two children for upto an amount the yearly interest does not exceed Rs. 1500/- per child (i.e. total yearly interest earning of Rs. 3000/- is your tax free income). The amount exceed to Rs. 1500/- per child will be clubbed in your income.
When your child turns 18, is treated as a separate individual as far as taxation is concerned under prevailing Income Tax Rules in Inida. This means that if you gift money to your adult child and the income on investment this money will be considered your child's earning. Your child's earning will be taxed subject to above the exemptions limit after eligible deductions as available to any other adult taxpayer. The child's income will not be clubbed with the parent's income.
This means that if your child's income falls below the basic exemption limit, you can earn tax-free income on investments of your gifted money. Please do remember that an income of upto Rs. 2.50 lac in a Financial Year will be tax-free.
If You have minor child and have exhausted your investment exemption limit in u/s 80C through your investments other than PPF, You can separately invest upto Rs. 1.50 lac in a Financial year in your child's PPF account. However under clubbing provisions, the interest income will be clubbed with that of parent and will be taxed as per applicable tax rules and provisions.
Under section 80DDB you can claim tax benefit for medical expenses upto Rs. 40000 (or the actual amount whichever is less) incurred for treatment of specified illnesses or ailments.
In case of salaried employee who is taking care of Physically Challenged Dependent Relative / Child, an amount with the maximum limit between Rs.75000/- to Rs. 125000/- spent towards medical treatment or rehabilitation can be deducted from the income (In the case of severe disability maximum deduction would be Rs. 1,25,000).