For Quick Alerts
ALLOW NOTIFICATIONS  
For Daily Alerts

Tax Saving Through Family Members: Here Are All The Possible Ways

|

Its tax planning season again and apart from tax deductions that you can claim under Section 80C, your family can also help you save tax through lesser known tax laws. Here we discuss the same:

 

Tax saving via spouse:
 

Tax saving via spouse:

1. Business: If the taxpayer is a business person or professional and his or her spouse who is also professionally qualified and helps in the business or profession then it shall be fair to share the total receipt between the firm and the spouse. In such a situation, the advantage of income tax slab can be availed on the income from business or profession of the spouse also. Say for instance if both spouses are doctors and offer medical services then in such a case invoices issued to patients can be divided in a way such that the slab benefit for both can be availed under Income tax.

2. Leave travel: The benefit of LTA can be claimed in respect of two journeys during the block of 4 years. And in a situation, when both spouses are working, then together they can claim LTA for 4 journeys carried out during four years time.

3. Loans: If you gift money to your wife and the same is invested, the interest on the investment shall be added to your income and taxed, provided the investment is made in a tax-free instrument such as PPF. Instead to reduce your taxable income, you can give loan to your spouse who has low or meager income source at a reasonable interest rate or can extend interest free loan.

4. Capital gains: The long term capital gains of Rs. 1,00,000 on sale of listed equity as well as units of equity mutual funds are exempted from tax implication in accordance with Section 112A and so the investment can be done in the name of both the spouses to claim exemption every fiscal year.

Tax savings through children:

Tax savings through children:

Here also there are various methods in which your children that includes adult children too can help you save tax:

1. Tuition fees: Here the deduction can be claimed by a parent against the tuition fees paid for two children to a university, college, school or any other educational institution as part of Section 80C.

2. Investments: If you make investments in your child's name such as in PPF, mutual funds, traditional insurance policies or ULIPs, you will be entitled to claim tax deduction up to a maximum of Rs. 1.5 lakh per year under Section 80C. Also, you can invest in equity mutual funds as gains of less than Rs. 1 lakh a year will not result in any tax liability.

Further in case if you have opened a savings account in the name of your child then Rs. 1500 interest income per child for two children will be tax exempt benefit as part of Section 10(32).

3. Loan: Against the education loan secured for your child, you get tax deduction under Section 80E on the interest repayment for up to 8 years beginning from the year in which interest repayment starts. Another way out to reduce your taxable income is to give an interest free loan to your children.

Savings tax via parents:

Savings tax via parents:

Through parent you can save a substantial amount of tax through any of the below routes:

1. Rent: The benefit of rent paid to one's parents can be claimed in the form of house rent allowance (HRA). "In order to demonstrate the bonafide of rental arrangement with his parents, one will have to retain the rental agreement, bank statement for payment, intimation to society about his tenancy, etc", Gopal Bohra, partner, NA Shah Associates is quoted as saying in a leading business dailies.

2. Investments: If your parents are in a lower tax bracket then you can transfer money into their bank account and invest in their name. This shall be a tax free financial gift and money can be put into schemes such as SCSS or senior citizen savings scheme, the post office MIS or any other investment fetching higher return. Senior citizens on fixed deposit interest income get a tax exemption of up to Rs. 50000 per year.

Through Parents-in-law:

Through Parents-in-law:

Also, in a case if your parents in law fall in a lower tax bracket in comparison to yours, you can gift money to them and they can invest it. The earnings on that investment shall be considered as theirs and will be taxed at a lower rate in comparison to the rate applicable to you. Further the gifted money is tax exempt for the parents in law.

GoodReturns.in

Read more about: tax income tax
Company Search
Get Instant News Updates
Enable
x
Notification Settings X
Time Settings
Done
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X