Ram lal ji : Krishna Lal ji, You Know how costly it is to now a days to up bring a child . Can parents get any tax benefits in India for taking care of there children,
Krishna Lal ji ( Tax Planner ): Ram lal ji, Yes Yes in India every parent who spends money from their income on the education & development of their children can take tax benefits but but alike you they are unaware of the taxation benefits due to which they are not able to claim the same at the time of filling their income tax returns.
Ram lal ji : Krishna Lal ji, Is it ! I an not aware of any such benefits . Can you let me know the benefits available to parents as deductions in Income Tax for expenses on their children?
Krishna Lal ji ( Tax Planner ) : Ram lal ji, Yes why not . I am away there to guide you. Alike you all the Parents make a lot of expenditure on their child’s education, there is a provision available under Income tax act which provides for-
1. Payment of tuition fees paid by parents for their children is allowed as deduction under section 80C. The Deduction is available to the extent of Rs 1,50,000/-.
2. Exemption for salaried taxpayer if they get perquisite from their employer for education of Rs 100 per month per child (upto 2 children) Maximum benefit Rs 2400/- can be taken.
3. Exemption for Hostel Allowance received by Salaried taxpayer of Rs 300 per month per child (upto 2 child) Maximum benefit Rs 7200/- can be taken.
4. Interest on Education loan taken for higher studies can be claimed under Section 80E.
Ram lal ji : Krishna Lalji, are there any special benefits for girl child?
Krishna Lalji ( Tax Planner ) : Ram lal ji, Government had launched “Sukanya Samruddhi Scheme”
for girl child, the scheme says that deposits can be made in the name of girl child by her parents. Deposits can be as low as Rs 250 per month to maximum of Rs 1,50,000 per year.
Following are the benefits which parents can enjoy-
1. Deposits made under the scheme are eligible for deduction under Section 80C of the Income Tax Act, 1961
2. Interest earned from the deposits are exempt from tax.
3. There will no tax on maturity or withdrawal of funds from the scheme.
Ram lal ji : Krishna Lalji, what will happen if a child is minor and he earns income?
Krishna Lalji ( Tax Planner ) : Ram lal ji, Income Tax provides following rules related to Minors earning & Income:-
1. If a minor has earned income, it will clubbed in the income of the child’s parents whose income is higher. Also, such parent can claim exemption of Rs 1500 or income of minor whichever is less.
2. However, if the minor child has earned income from manual work or any activity involving application of his/her skill, knowledge, talent, experience, etc, then the income shall not be clubbed in the income of his/her parents.
For Example- A Minor has earned Rs 10 Lakh as a winning prize in a singing competition, then that income shall be taxed in hands of that Minor and will not be clubbed in parent’s income.
Ram lal ji : Krishna Lal ji, what lesson the taxpayer should take from this?
Krishna Lal ji ( Tax Planner ) : Ram lal ji, Any parent in the world always want their child to excel in any activity their child wants to go, and parents spend their earning in making their children’s dream come true. Education is the right of every child but there are few who are lucky to get it and those who are lucky to have should take benefits of the deductions that are available with it.
If you are interest in getting your tax planning done in such a way that you are able to take the benefits of all the available tax benefits to you then please book a consultation today with Shoshaku service so that we can advice you & save your hard earned money.