Many of our users write to us asking about tips to save tax. While it may not be feasible to curtail expenses – there are some ways in which your family can help you save tax. Today let’s look at some tax saving through your parents.
- Do you live with your parents? You can enter into a rent agreement with your father or mother whoever owns the house and pay them rent. If they own the house jointly you can pay rent to both in the proportion of their ownership. If they are in a lower tax slab or do not have an income, they will pay lower tax on the rental income that they will show in their return or no tax at all. Do note that senior citizens have a higher exemption limit – Income up to Rs 3,00,000 is exempt for those up to 80 years old and Rs 5,00,000 for those who are more than 80 years old. This way you will be able claim exemption on HRA.
- Assuming they have a taxable income by receiving rent from you – they can further invest this income in tax saving options such as senior citizen fixed deposits, or any of the other instruments where the returns are not taxable such as PPF or senior citizen savings schemes or ELSS.
- Purchasing a health insurance policy for your parents can also get you tax saving benefits under section 80D. A maximum of Rs 20,000 can be claimed in FY 2014-15 and for FY 2015-16 this limit has been raised to Rs 30,000
Hope you found these tips useful – write to us if you have any questions. You can leave us a comment here too 🙂