Save Income Tax on Pre-Nursery, Loan Interest, Home Rent & more
These days, all companies are asking for investment proof for income tax calculation purpose from their employees. Many employees are worried that they haven’t made enough investments, which has led to a high tax liability. That’s why between Jan’24-Mar’24 many individuals are thinking of some additional investments before 31st March to avail tax benefits.
While most people know about many tax-saving instruments, in this article we will discuss about 5 ways that very few individuals are aware of.
(1) Tax exemption on pre-nursery school fees
If your child is small and is in playgroup, pre-nursery, or nursery, you can also avail tax benefits on their fees. Although this tax benefit was introduced in 2015, it hasn’t gained as much popularity as the school tuition fee deduction. You can avail this deduction under section 80C, and it can be availed for up to two children.
(2) Take loan from parents and pay interest
If your parents are in a lower tax bracket or are not currently taxed, you can take a loan from them for household expenses and pay them interest. However, don’t forget to obtain an attested certificate of interest payment to claim the tax deduction. If you can’t provide this proof, you won’t get the tax benefit. You can claim this tax deduction under section 24B of the Income Tax Act. The maximum deduction under this section can be up to 2 lakh rupees.
(3) Give home rent to parents
If you live with your parents and are unable to claim HRA, you can claim HRA by paying rent to your parents. Under section 10(13A) of the Income Tax Act, you can show yourself as tenants and avail tax deduction on HRA. You can prove that you pay rent to your parents. However, if you are already claiming another housing benefit, you won’t be able to claim HRA.
(4) Take health insurance for parents or spouse and children
You can save tax while taking care of your parents’ health. If you take health insurance for your parents, you can get a tax deduction on the premium amount. For parents under 65 years of age, you can get a tax deduction of up to 25,000 rupees on the premium. On the other hand, for parents over 65 years of age, you can benefit from a tax deduction of up to 50,000 rupees.
(5) 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 of age or older. At this age, they often have to bear many medical expenses, on which you can get a tax deduction under section 80D. You can get a tax deduction of up to 50,000 rupees.
Hi, I am Nikesh Mehta, owner and writer of this site. I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected].