Your family can help you save taxes – here’s how
This is time of the year when we are scurrying to put together our investment proofs and tax savings documents. You family can help you save taxes too, let’s find out how.
Health insurance – The pressures of modern living have put our health at greater risk. While most employees have a medical insurance cover from their employer, it usually only covers hospitalization. Buying a medical insurance cover for your spouse, children and parents to cover common ailments has tax benefits too. For you and your spouse & children a deduction of Rs 25,000 and for parents an additional Rs 30,000 can be claimed under section 80D. You can also avail tax benefits under section 80D if you purchase a term insurance plan with a critical illness benefit. Do remember to pay the annual premium at this time, so you can claim the entire amount as deduction in your tax return.
Medical check-ups – Included in the amount for deduction under section 80D is health check-ups for your family. If you do not want to go for medical insurance, getting a preventive health check-up done for your family will help you save taxes. Several hospitals and clinics offer preventive health check-up packages. A maximum of Rs 5,000 can be claimed for you, your spouse’s and your children’s health check-up. Rs 5,000 can also be claimed for health check-up of your parents. These amounts however are within the overall limit of section 80D. You can get both medical insurance as well as preventive health checkup but the total deduction cannot exceed the amounts specified above.
Life insurance premium – Buying a life cover for you & your family can save you taxes. The premium paid is allowed as a deduction under section 80C. The policy must be in the taxpayer’s or spouse’s or any child’s name (the child may be dependent/independent, male/female, minor/major, or married/unmarried). A maximum of Rs 1,50,000 can be claimed under section 80C. If you intend you purchase a life insurance policy do check the premium commitments, terms and the cover in detail. You’ll have to pay the premium over a number of years and do not make the decision in haste to save taxes.
Rent on accommodation – If you are living with your parents, you can pay them rent and save tax on HRA. Enter in to a rent agreement with your parents and pay them the monthly rent. Your parents will include this rental income in their tax return. If the house is jointly owned they can split the income in the ratio of their ownership. If they are in a lower tax bracket or do not have taxable income, as a family you’ll end up saving tax. For parents who are more than 60 years old the exemption limit is Rs 3,00,000 and for parents older than 80 years, the exemption limit is Rs 5,00,000. So if they this rental income keeps them under the exemption limit, you’ll have greater tax benefits The rental income earned by them can be further invested in tax free instruments such as ELSS or senior citizen’s savings scheme or fixed deposits.
Tuition Fees – 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. A maximum of Rs 1,50,000 can be claimed under section 80C.
Your family can help you save tax on your hard earned money.
This article is by ClearTax (www.cleartax.in), where Individuals and Businesses can e-File their I-T Returns online.
Please note that the tax write-up above is for general understanding and reference. The reader will have to verify the facts, law and content with the prevailing tax statutes and seek appropriate professional advice before acting on the basis of the above information. Tax benefits are subject to conditions of Sec.24, 80C , 80D, 10(10D) and other provisions of the Income Tax Act, 1961. Goods & Services Tax and cesses ,if any ,will be charged extra, as per prevailing rates. Tax benefits are subject to amendments made thereto from time to time. Please consult your tax advisor for details before acting on above. ICICI Prudential Life Insurance Company Limited expressly disclaims any liability to any person, if tax benefits stated above are denied to the customer. L/II/1711/2015-16