Tax Saving Tips: 5 lesser-known investments and expenses that can help you save income tax
Tax Saving Tips: Discover lesser-known tax-saving opportunities with these tips on investments and expenses, ranging from pre-nursery fees to health insurance and medical expenses for parents, which may help you maximise your income tax savings effectively.
Tax deduction on pre-nursery fees
If your child is in playgroup, pre-nursery, or nursery, you can still avail tax exemption on their fees. Although this tax benefit was introduced in 2015, it hasn't become as popular as the school tuition fee deduction. You can avail this exemption under Section 80C and it is applicable for up to two children.
Pay interest to parents
If your parents fall into a lower tax bracket or are not currently subject to tax, you can take a loan from them for household expenses and pay interest on it. However, to claim tax exemption, make sure to obtain an attested certificate for the interest payment. If you fail to provide this proof, you will not receive the tax exemption. This tax exemption can be claimed under Section 24B of the Income Tax Act, with a maximum exemption of up to Rs 2 lakh.
Pay rent to parents
If you live with your parents and are unable to claim HRA (House Rent Allowance), you can pay rent to your parents and claim HRA. If you think this is wrong, it's not. Under Section 10(13A) of the Income Tax Act, you can show your parents as your landlords and get a tax deduction on HRA. You can demonstrate that you pay rent to your parents for living in their house. However, if you are availing of any other housing benefits, you will not be able to claim HRA.
Take health insurance for parents or wife and children
You can save on taxes while taking care of your parents' health. If you purchase health insurance for your parents, you get a tax deduction on the premium amount. For parents under the age of 65, you can claim a tax deduction on premiums up to Rs 25,000. For parents over the age of 65, you can avail a tax deduction on premiums up to Rs 50,000.
Tax deduction on parents' medical expenses
You can also get a tax deduction on your parents' medical expenses. However, it is necessary that your parents are 60 years old or above. At this age, they often incur significant medical expenses, on which you can claim a tax deduction under Section 80D. You can avail a tax deduction of up to Rs 50,000 on these expenses.