you can save do Direct your way on your income by investing in tax-saving avenues like equity linked savings schemes, Public Provident Fund (PPF), certain insurance policies, planning for home loans and availing tax exemption on the rent you pay.
Beyond these, there are some indirect ways your parents can help you reduce your overall financial obligation, We tell you three such tax-saving methods, however, note that these are especially helpful for people whose parents are outside the tax bracket or have a very low taxable income.
gift to parents
You can transfer your surplus to your parents under gift deed and invest in their name.
The basic tax exemption limit for senior citizens is 3 lakh, while very senior citizens of age 80 years and above get tax-free income up to 5 lakhs.
In addition, interest income up to 50,000 earned on deposits in banks or post offices are exempt from tax for senior citizens. Even if your parents’ income exceeds the basic exemption limit, you will effectively pay less tax on investments under their names as per their tax slabs.
Cash gifts received from a child are exempt from tax and income earned from such investments will not be added to your income for taxation. However, Shailesh Kumar, Partner, Nangia & Co said that if you have such income or the power to control such investment, then such investment will be treated as a revocable transfer and their income can be clubbed with yours. .
buy health insurance for parents
Under section 80D, you can claim tax deduction of up to 25,000 on premiums paid for a health insurance policy purchased for your parents, who are below 60 years of age. For senior citizen parents, the deduction limit is 50,000
Claim HRA even if you are not living on rent
If you live with your parents in a house owned by them, you can claim the House Rent Allowance (HRA) tax exemption by paying rent to them. The condition is that you actually pay them the rent and don’t even have partial ownership in that house. With the introduction of Annual Information Statement (AIS), the rent you pay to your parents will be reflected on their AIS, which means that submission of bogus rent receipts will be known by the tax department and put you on the radar of the taxpayer. will take over.
Never miss a story! Stay connected and informed with Mint.
download
Our App Now!!
,