2024-07-18 10:51:20
The month of July is very important in terms of tax. July 31 is the last date for filing ITR and in such a situation everyone wants to get information related to tax. As the last date for filing Income Tax Return (ITR) on July 31 is approaching, it is important to know what are the various exemptions available for it.
Very few people know that you can get tax exemption even if you have children. Families with children can avail certain exemptions under the income tax slabs which can reduce their tax liability. These exemptions help parents reduce the financial burden of raising children and are designed to provide some relief from tax obligations. By understanding and using these exemptions properly, taxpayers can reduce their total tax and increase their savings.
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Expenses on children’s education
Deduct tuition fees paid for children’s education under Section 80C of the Income Tax Act, which can be up to ₹1.5 lakh per child, per financial year, for courses in India. Also, interest earned on children’s savings accounts up to ₹1,500 per child per year is tax-free under Section 10(32).
Premiums paid for health insurance covering children (including dependent parents) are eligible for deduction under Section 80D, which can be up to ₹25,000 (₹50,000 for senior citizens).
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Expenses on health
Medical expenses for the treatment of children can be claimed as a deduction under Section 80D. Additionally, investments in Sukanya Samriddhi Yojana (SSY) are eligible for deduction under Section 80C, with interest earnings and withdrawals being tax-free.
Loan taken for children’s education
If you take a loan for your child’s higher education, the amount of interest paid on the loan will be deductible under Section 80E for eight years from the time the payment starts.
Term Insurance
If you have not met the ₹1.5 lakh annual limit of Section 80C with your investments, you can invest for your child to avail full exemption. For example, you can invest in PPF, ULIPs, mutual funds and some traditional schemes, but remember that the income from these will be added to your income and taxed at the applicable rate. This can be avoided by investing in instruments that do not levy tax on income, like PPF, or equity mutual funds, where profits are tax-free if they are less than ₹1 lakh per annum.
Public Provident Fund (PPF)
Opening a PPF account in the name of a child is eligible for deduction under Section 80C, with the interest and maturity amount being tax free.
Investment in NSC for child is eligible for deduction under Section 80C, thereby providing tax benefits along with a safe savings option.
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