Happy Fathers’ Day: Here’s How Your Father Can Help You Save Some Taxes
Wishing all the Dads a very Happy Fathers’ Day!
Having a dad means goodbye to all worries because he’s there to handle all the adverse situations to see your smiling. He listens and solves all your money related problems, mental stress, and business problems.
But, do you know he can also help you cut your tax outgo? Yeah, you can avail some benefits to slash your taxable income, if you make certain investments or incur expenses in your parents’ name –
Paying HRA to your parents
If you are living in own home but still availing HRA from your company, you have to pay tax on it since you are not paying any rent actually. However, if the house is registered in your parents’ name, you can pay rent to them and make a part of your HRA tax-free.
But, you should do it only if their income falls below the basic exemption limit or in a lower tax bracket since they’ll have to show the rent received from you as an income while filing their ITR. To avoid any adverse tax implications, consult a chartered accountant to get professional advice for saving tax on HRA.
Also, if you’re a freelancer who wants to know how to save tax, click here.
Paying for their Mediclaim Policy
Buying a mediclaim policy is helpful to bear the costs of any medical emergency arising to your parents.
Also, under section 80D of the income tax act, you can claim the deduction of the premium amount paid for the mediclaim policy taken for your parents, over and above the deduction admissible for your, spouse and children’s mediclaim policy.
If your parents are less than 60 years of age, you can claim a deduction up to ₹ 25,000. If their age is 60 years or more, the deduction amount is up to ₹ 50,000.
Shifting Interest Income to their Account
If you are earning interest from FD account or any securities, it is applicable to TDS. You can instead transfer money to your parents’ account so they can open FD account and earn interest. Again, it is advisable to do so only if your parents don’t earn OR their income falls below basic exemption limit OR income belongs to a lower tax bracket.
You can transfer the money in the form of a gift to your parents. Since any gift to the family members is tax-free, you can avoid the tax outgo easily.
Helping them Avail more Deductions
If you are paying rent to your parents or they are earning interest out of the FD opened from your money and the income is falling under higher tax bracket, you can gift them more money so they can invest in LIC policy or other tax-saving deductions.
Anyways, you can’t claim the deduction of LIC premium paid for your parents, hence this option can bring twofer benefits – their life gets secured by a LIC policy and the tax outgo also gets reduced.
Although these tips are proven to be beneficial in tax saving, you should find a tax professional near you who can give optimum advice based on your practical aspects.
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