'Calculate RD & FD Maturity Value'   'NPS Calculator'   'Calculate LTCG on Shares / MF'   'Know Loan Repayment Details'   'Family Pension Calculator'   'Know Week Day You Born'   '11th BPS Expected Basic Pay '   'PPF Investors: इस जानकारी को पढ़े और मित्रों के साथ शेयर करें'   'Crorepati/ELSS/SIP Calculator'   'Download RTGS/NEFT Fillable Form'   'NSE/BSE Index Date wsie'   'PPF Calculator'   'Eligibility to Submit 15G/15H '   'Calculate PPF Withdrawal Amount'   'Fillable Pay In Slip - Auto Amount in Words & Cash Details & '   'Hindi English Translation Practice Exercises'   'SSY Calculator'   'Flexi Fixed Deposit Calculation - Interest/TDS'   'Know Current FY PPF Interest Amount'   'Bankers Expected DA'    'Pensioners Expected DA'   'PPF vs Recurring Deposit'   'Crorepati Calculator'   'Calculate RD/FD Maturity Value'   'Challan 280 (In Fillable Format)'   'Compare Two Loans Interest Payment'   'Letter Writing Helping Sentences'   'English Confusing Words'   'Calculate Your PPF Due Date'   'List of Bank Holidays Statewise'   'Cash Totalling & Tally Cash Position'   'Nifty Bank Date wsie from 15000'   ' PPF Scheme Features'  
Share This Page with Friends / Groups On
View Today - Observances View Today - Observances
Home >> Income Tax >> You are Here
Know How Parents can Reduce Your Tax

Know how Kids may reduce your Tax Liability

The following Simple Smart Strategies which can reduce your Tax outgo

Invest in the name of Minor child

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.

Invest in the name of Adult child

When your child turns 18, is treated as a separate individual as far as taxation is concerned under prevailing Income Tax Rules in india. 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.

Can Raise Your Investment Limit In PPF

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.

Tax benefit for Medical Treatment of Specified Illnesses for handicapped child

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.

Tax benefit for Medical Treatment of physically challenged dependents

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).