Tax planning at the start of the financial year is of great importance as it helps you save income tax, when you look to file your tax returns.
Therefore, consider your spouse and parents who can help you save income tax by splitting your income. Let's take a look at how family members can help you save tax.
Interest on bank deposits
If you have a spouse who does not have any source of income, it makes sense to place the deposit in his or her name. In case parents do not have any source of income, you can place these deposits in their name.
Remember, any income up to Rs 2.5 lakhs is not taxed and you can make use of this amount, in case your parents or wife is not in taxable income bracket.
Also read How TDS is deducted from bank deposits?
House rent to parents
In case you are staying with your parents, it makes sense to pay them a rent. You will thus save tax on the House Rent paid. This is of course, if your parents do not have any income and you are staying with them.
Health insurance for parents
In case you pay the health insurance for parents, you can claim additional tax deductions. For example, for yourself, spouse and children health insurance premium up to Rs 18,000 can be claimed by way of tax benefits under Sec 80D of the Income Tax Act. However, for senior citizens the amount is Rs 20,000.
Tuition fees deduction
In case you have more than 2 children, you can split the tuition fee amount paid with the spouse. Another way to reduce your tax burden is through transferring some of your funds either as loan or gift in your parents or parents-in-law name.
Also read the Tax benefits available on tuition fees here
If you have a working spouse and wish to take a home loan, it's best that both of you take a home loan. In this way you can claim tax exemptions on interest and the principal amount paid for both the husband and the wife.
It's best to plan your taxes at the start of the year and correctly. For example, if you have already taken a home loan, you cannot go back and make it a joint home loan. So, be careful before taking any action and plan well.