Save Tax with the Help of Your Family: Smart Strategies

Invest in the Name of Parents If your parents are in a lower tax bracket, gift them money to invest in fixed deposits or senior citizen schemes. They can claim up to INR 50,000 tax exemption on interest income, saving you tax on this amount. Pay Rent to Parents If you live in a house owned by your parents, pay them rent. Claim House Rent Allowance (HRA) deduction, while your parents can claim 30% of the rent received for repairs and maintenance, reducing taxable income.

Buy Health Insurance for Parents Purchasing health insurance for parents over 60 years old allows you to claim up to INR 50,000 deduction on the premium paid under Section 80D. Joint Home Loan with Spouse Co-own and co-borrow a home loan with your spouse. Both can claim tax benefits on interest and principal repayment, saving up to INR 7,00,000 under Sections 80C and 24(b).

Provide a Loan to Spouse Instead of gifting money, lend to your spouse at a reasonable interest rate. If the spouse invests in higher return instruments, overall family tax liability decreases. Education Loan for Higher Studies Claim tax benefits on the interest repayment of an education loan for up to 8 years under Section 80E, provided the loan is from a recognized financial institution.

Investing for Children Invest in tax-saving instruments like PPF, mutual funds, or ULIPs in your child’s name. Opt for tax-free investments like PPF to avoid tax on the income earned from these investments. Tuition Fees, Education Allowance, and Hostel Fees Claim deductions for tuition fees of up to two children under Section 80C. Salaried employees can also claim children's allowance (INR 100/month per child) and hostel expenditure allowance (INR 300/month per child).