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| Posted: 25 Mar 2013 07:14 AM PDT Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India)
Let us look at some of the deductions we can claim for investments made in children's names. Most of these deductions fall within the investment limit of ₹ 1 lakh, under Section 80C.
Tuition Fees Paid: In respect of school fees a parent can claim a deduction of tuition fee paid to any university, college, school or any other educational institution. The deduction on payments made towards tuition fee can be claimed up to ₹ 1 lakh together with deduction in respect of insurance, provident fund and pension. It can only be claimed in respect of two dependent children and for fees to an educational institution within India and for tuition fee only. Interest on Education Loan : The cost of higher education is often a burden on the family's budget and parents are forced to borrow for their children's education. The interest paid ( not the principal amount) on an education loan is fully deductible from taxable income under Section 80E up to eight continuous years, starting from the year in which the interest is first paid. This can be claimed by either the child ( if the loan is in their name) or by the parent.
Premium paid for health insurance:
Parents can claim a deduction up to a limit of ₹ 15,000 on premium paid towards health insurance policies taken for their children.
Tax benefits for certain ailments
The treatment of a chronic illness can be a drain on the finances of a family. This is why the Income Tax Act allows a deduction of ₹ 40,000 if one has a dependent child who suffers from any of the ailments specified under Section 80DDB, provided the child does not separately claim any deduction towards the same ailment.
Aliments for which tax breaks
are available are few: Neurological diseases ( like Dementia, Dystonia Musculorum Deformans, motor neutron disease, ataxia, chorea, hemiballismus, Aphasia, Parkinson's Disease), cancer, full blown acquired immune deficiency syndrome ( AIDS), Chronic renal failure, hemophilia and thalssaemia.
Disabilities also eligible for
deduction: If one has a disabled dependent, one is eligible to claim ₹ 50,000. The deduction is available only if the impairment is at least 40 per cent and if the disability is severe ( 80 per cent or above), the deduction is ₹ 1 lakh a year. Incidentally, the deduction is offered as a lump sum and is irrespective of the actual amount that the taxpayer may spend.
To claim this deduction, under Section 80U one must furnish a copy of the certificate issued by the medical authority in the form and manner, as may be prescribed. Medical Authorities means any hospital or institution specified in Persons with Disabilities ( Equal Opportunities, Protection of Rights and Full Participation) Act, 1995.
Such Medical Authorities are prescribed from time to time by Government Authorities.
Hostel Allowance ₹ 300 per month per child up to a maximum of two children is exempted ( only if expenses are incurred in India) Education Allowance ₹ 100 per month per child up to a maximum of two children is exempted ( only if expenses are incurred in India)
Medical Expenses
Reimbursement Deduction of up to ₹ 15,000 per annum is allowed. This can be claimed for self as well as for children who are dependent. Medical bills have to be furnished to avail this benefit.
Free/ Concessional Educational
Facility: Deduction to an extent of ₹ 1,000 per month is allowed provided the educational institution is maintained and owned by the employer or any other educational institution by reason of his being in employment of that employer.
Setting up a Trust: One can save taxes by creating a trust for children.
One needs to make an irrevocable transfer to the trust, where money cannot be claimed back by the donor. All investments are made through the trust and the income generated can only be used in accordance with the purpose of the trust. The income from the investments is not clubbed with the donor's income, but the trust needs to pay tax. This method helps reduce the tax liability.
Gifts: Any gift received in cash or kind exceeding ₹ 50,000 is taxed in the hands of the recipient. However, this rule does not apply to gifts received from relatives and received on the occasion of one's marriage or under a will or inheritance.
Any transfer of money or of movable or immovable assets, is considered as a gift. Though there is no tax on gifts, all gifts in excess of ₹ 50,000 (other than those from relatives) and income generated through them get clubbed with the recipient's taxable income. However, income earned by assets gifted to minor children are included in the income of the donor for taxation. If you want the money earned to be treated as independent income of your minor children you will have to prove that the recipients had used their own acumen for making money from the gifted assets.
By utilising these tax breaks given by the income tax department, it is possible to further reduce one's tax burden. However, only one parent can claim these benefits - not both.
Summary:
One can deduct their children's education expenses, and medical bills against their taxes [1]A dependent child's income will be clubbed with yours unless it can be proved that the child has earned the money in his or her own right [1]Setting up a trust for your children is a tax efficient method of investing on their behalf [1]Only one parent can claim deductions for the children, not both
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--------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.
Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)
Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications
These Application Forms can be used for buying regular mutual funds also
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| How to Pick a suitable Investment product Posted: 24 Mar 2013 09:31 PM PDT Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India)
Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com
--------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.
Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)
Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications
These Application Forms can be used for buying regular mutual funds also
Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )
------------------ Best Performing Mutual Funds
|
| Posted: 24 Mar 2013 08:22 PM PDT Invest In Tax Saving Mutual Funds Online Call 0 94 8300 8300 (India)
Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com LICs product gives lower maturity benefits and returns in the long run NOT SO GOOD Life Insurance Corporation's ( LIC's) ' Jeevan Sugam' is a single- premium endowment product.
Since the product gives death benefit ( sum assured) that is equal to 10 times the premium paid, it will qualify for tax exemptions under Sections 80C and 10( 10D) at entry and exit.
Along with LIC, Star Union Dai- Ichi has a similar product to offer, which is giving a higher guarantee and a better rate of interest than LIC on ₹ 1 lakh single premium paid by a policyholder.
Both are single premium endowment products. The insurers have launched this products under the endowment umbrella to give guaranteed returns to customers.
Additionally, there are enough single premium products available in the market which fall under the unit- linked insurance product category.
The products are available to people between the age group of eight and 45 years. According to experts, individuals will have to undergo a medical test before buying this product.
Both the products are close- ended and will be available for purchase only till the end of this month. While both the products are giving a death benefit equal to 10 times the premium paid, their maturity benefits will differ. Ten years is the policy tenure.
According to the data available, if a person buys Star Union's ' Dhan Suraksha Platinum II', he or she will get a maturity benefit of ₹ 1.81 lakh after 10 years ( policy tenure) against ₹ 1.77 lakh in LIC's ' Jeevan Sugam'.
Reason: The difference in their returns is due to the different mortality tables used by both insurers. Experts say since LIC is deeply rooted into rural areas where risk to life is higher, there are chances their premium rates are higher due to that.
In the long run, Star's product will return better than LIC's because after 10 years Star Unions product will give an IRR ( internal rate of return) of 5.8 per cent, compared to 5.6 per cent returned by LIC.
Hence, one shouldn't buy these products for investment sake because their returns from the guaranteed portion are not attractive. If one is looking at good returns, they can consider investing in a Public Provident Fund (PPF) and bank fixed deposits which guarantee better returns.
While insurance is not for investment, its still better to weigh your options in case you plan on buying one. Hence, it's better to compare insurance products, their premiums and benefits offered before buying them. Financial planners say it's an investment product and people left with no other tax- saving avenue only should make use of such products. LIC and Star Union are offering an additional benefit of 4.5 and two per cent if your maturity sum assured exceeds ₹ 5 lakh. In other words, Stars benefits here is less compared to LIC.
Star Union has clearly mentioned in the product details that the product will give a tax break on the plan benefits received, under Section 10 ( 10D). Whereas, LIC has not mentioned this on their website.
While R R Dash, zonal manager, LIC confirms the maturity amount from this product is tax- free under Section 10( 10D), we have still refrained from mentioning it, in case tax laws were to be changed anytime this year.
In the case of Star Union, the maximum amount of loan that can be availed is 75 per cent as against 60 per cent in the case of LIC. That quantum will be available as the surrender value at the time of taking the loan.
If the policy is surrendered on or before the second year is completed, the insurers will return 90 per cent of the single premium paid. Whereas, in case the LIC policy is surrendered in the first year itself, then the company is returning 70 per cent, compared to 85 per cent in case of Star Union.
While single premium products are expensive compared to pure protection plans, it makes sense not to mix insurance products with investment products. While one has to make regular annual payments in protection plans, it makes sense, as the death benefit offered by life insurers is much more than such investment- based products. If one is looking at such products purely for tax- saving purpose, then he or she can also consider tax- free bonds giving returns in the range of 7 and 7.5 per cent. Additionally, people ready to take some equity exposure can invest in an equity- linked saving scheme.
--------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.
Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)
Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications
These Application Forms can be used for buying regular mutual funds also
Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )
------------------ Best Performing Mutual Funds
|
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