Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: VAT Audit :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: cpt :: articles on VAT and GST in India :: TDS :: Central Excise rule to resale the machines to a new company :: TAX RATES - GOODS TAXABLE @ 4% :: due date for vat payment :: VAT RATES :: empanelment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: list of goods taxed at 4% :: ACCOUNTING STANDARD :: form 3cd :: ACCOUNTING STANDARDS
 
 
General »
 Questions about the GST cess
 How to prepare for the looming tax-extension deadline
 Income tax: Gratuity for employees raised to Rs 20 lakh; here is how you will benefit
 Haryana to set up scrutiny panel on GST benefits
 Waive certain taxes for companies in insolvency proceeding
 I-T department to appoint 7600 more tax return preparer scheme to cover entire country
 All eyes are on GST as Centre plans higher social pension
 Exporters demand total exemption from GST
 Here's what you must know to stay clear of taxman
 Filing income tax returns is not enough, you need to link Aadhaar with PAN before deadline ends
 If you don't link Aadhaar, PAN by Aug 31, your ITR won't be processed

Want tax benefits? Your relatives can be of help
March, 18th 2014

Over the next two weeks, the tax season for FY14 will come to an end. But if you are still fretting over having to pay high taxes, you have a way out. You could use members of your family - parents, children and spouse - for some additional deductions. Not all investments and spending for the family are eligible for tax rebates. However, there are some ways to save you high taxes. Here's how:

Buy health insurance for the family: Given that it's a necessity, the earlier you buy a medical insurance, the better. If you buy it only for yourself, you can save up to Rs 15,000 a year. But if you buy a policy for your parent, you can get an additional deduction of Rs 20,000 a year per parent under Section 80D.

"Benefit under Section 80D can be claimed for payment of premium towards health insurance for self, spouse, children and parents. You can claim deductions of up to Rs 15,000 for premium payment for self, spouse and kids and up to Rs 20,000 for senior citizen parent(s)," explains Amarpal Chadha, tax partner at EY.

If your parents are not senior citizens, you can claim up to Rs 15,000 for premium payments for their health cover. This deduction is available irrespective of whether the parents are financially dependent or not. In case of a married couple, the husband can claim for premium payment for his parents and the wife can claim for her own parents.

In children/wife's name: Most individuals with school-going kids anyway claim deduction for paying education fee. You can also invest in your child's name or even in your spouse's name. However, interest earned on investments made in a child's name is clubbed with that of the parent who earns more - either the father or the mother, under Section 64.

"To avoid clubbing of your child's income, you may invest in instruments where the interest income is exempt from tax. Like Public Provident Fund (PPF), equity mutual funds or life insurance - term and investment policy," says Kuldip Kumar, executive director (tax & regulatory services) at PricewaterhouseCoopers. There is a limitation to this option, though, that the contribution to your own PPF account and that of the child cannot exceed the overall limit of Rs 1 lakh a year.

"However, if you reinvest the interest income earned from investments made in a relative's name, then the returns earned are not clubbed to your income as it is considered the relative's income (child/wife)," adds Kumar. You can use this strategy even if your spouse is earning but falls in a lower tax bracket.

Additionally, you can invest Rs 15,000 per child (for up to two children) in a one-year fixed deposit scheme, which returns 10 per cent annually and be exempted from tax.

Major children help save more: Section 64 does not apply to investments in the name of children who are above 18 years. Such children are treated as a separate taxpayer. You can transfer money to a major child and avail tax exemption of Rs 2 lakh or the basic exemption limit applicable to the child. So, you can freely gift him any amount of money and invest it for tax-free instruments. In this case, the PPF limit increases by another Rs 1 lakh. You can also invest on behalf of a child who is under 18 years, if s/he will turn 18 before the financial year ends.

Lend to your spouse: Instead of gifting money to your spouse for investment, consider lending to your better half for buying a property. As long as s/he pays interest to you for the loan (even if it is nominal), the rental income from this property will be taxable in his/her hands, not yours. On the other hand, if you buy a house in your spouse's name or transfer the second property to his or her name, it will be taxable in your hand. Instead of paying interest for the loan, your spouse can also transfer jewellery or any other asset which is worth equal to the property cost. In this case too, rental income will not be taxable.

One can give up to Rs 2 lakh (the tax exempt limit) without putting any tax liability on the partner.

Pay rent to your parents: If you live with your parents and pay them rent, you can claim that amount. "However, your parents will be taxed on this. Therefore, there are a few criteria for making such a claim. The house should be registered in parents' name and the parents should also show the amount as their rental income," says Chadha.

To lower their tax on this rental income, your parents can claim a flat 30 per cent of the annual rent as deduction for house maintenance expenses. Or, invest in Section 80C instruments such as the Senior Citizens Saving Scheme or five-year bank fixed deposits. Say you pay a rent of Rs 30,000 a month, or Rs 3.60 lakh a year.

Assuming your parents are senior citizens, their basic exemption limit is Rs 2.50 lakh. Which means, their taxable income is Rs 1.10 lakh, which can be invested to cut out on tax liability. Here, we are also assuming the parents earn solely through rental income, which may not be the case for interest income on bank deposit also qualifies as income.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Application Management Solutions Application Management System Application Management Software System Application Management Development Application Management Software Development

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions