While planning for tax-saving investments, people should take a look at numerous methods of investing of their youngsters’s title to save lots of tax. Investments within the title of kids in tax-saving devices equivalent to Public Provident Fund (PPF), Sukanya Samriddhi (for woman youngster), conventional insurance coverage and sure mutual funds won’t solely aid you to scale back your tax liabilities however will even assist in constructing a big corpus for them within the long-run.
Invest in PPF, Sukanya Samriddhi
For all risk-averse traders, investing in PPF can assist construct a corpus for youngsters, particularly for his or her greater training and marriage. You can make investments as much as Rs 1.5 lakh in PPF in a monetary yr. The present price of curiosity is 7.1%. A mum or dad can open a PPF account for his minor youngsters. The account will probably be underneath the guardianship of the mum or dad until the kid is eighteen years outdated. However, if the mum or dad has an present PPF account in his title, then the funding in each the accounts (mum or dad and youngster) can’t exceed the general restrict of Rs 1.5 lakh in a monetary yr.
Either of the mother and father can open a PPF account on behalf of the minor and avail tax exemption underneath Section 80C of the Income Tax Act. The paperwork required are a passport-size {photograph}, proof of age of the kid and PAN of the guardian. Once the kid completes 18 years of age, the title of the guardian will probably be eliminated and the grownup youngster can proceed investing within the fund by renewing it each 5 years after the 15-year maturity.
A mum or dad can open a Sukanya Samriddhi account within the title of the woman youngster and make investments as much as Rs 1.5 lakh in a monetary yr and declare tax deduction underneath Section 80C. The rate of interest is 7.6% and the account will be opened as much as the age of 10 years solely from the date of delivery of the kid. Money will be withdrawn from the account after the kid attains the age of 18 or passes tenth commonplace. The account will shut after 21 years from the date of opening or on the time of marriage of the kid after attaining age of 18years (one month earlier than or three months after date of marriage).
Spending on tuition charges
Tuition charges paid for a most of two youngsters every year are eligible for tax exemption of as much as Rs 1.5 lakh underneath Section 80C. Moreover, a salaried worker can declare exemption of Rs 100 monthly, per youngster (two youngsters solely) as youngsters’s training allowance and Rs 300 a month, per youngster as hostel expenditure allowance. A pair with three youngsters can declare tax advantages if each mother and father are taxpayers. The tax exemption will be claimed provided that the kid is finding out in a recognised institute in India.
Source: www.financialexpress.com”