3 Ways Your Parents can help you Save Taxes?

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• Can i open FD account in my fathers name and get tax exemption ? As you had mentioned in your 2nd paragraph. If so how ?

  • Opening FD in your father name means following transaction from income tax perspective:
    1. You gift money to your father [Non taxable in your father hand]
    2. Your father invests money in FD and earns interest
    3. The tax on interest income has to be paid by your father
    So in case your fathers income tax slab is lower than yours you can invest in his name. Just be sure that if you invest in your father's name its his money and legally he has all the right on money. So a good understanding with your parents and siblings is important!

• dear sir, my parents are in govt service and their health insurance premium is being deducted yearly by them. so can i claim that premium amount in my income tax filing under sec 80D

  • If your parents employer is deducting health insurance premium from their salary, then you cannot claim tax benefit for the same. The deduction is only valid if you pay for your parent's health insurance premium.

• Informative and Useful

• Firstly I would like to thank you for sharing nice information.

  1) It will be better if you provide clause / section number of the relevant Act.
  e.g. You have quoted that if we invest in the name of minor child, exemption of Rs 1500 is applicable. Mentioning the reference will clear the matter.
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  2) If father is a tax payer and mother does not have her own income. Both are senior citizen. Can I invest on mother's name ?

  3) if any paper work is necessary for gift transaction ?

  4) In case of parents, can we open PPF account in their name ?

  • Hi Hari:
    1. The exemption of Rs 1,500 for income in the name of minor child is given under SECTION 10(32)
    2. Yes you can invest in your mother's name. The transaction in the eyes of Income tax would be - you gifted your mother X amount, your mother invested it and then on maturity your mother gifted you interest and principal. This is perfectly legal.
    3. It's a good idea to have records on plain paper for small gift amount, however if the amount is large and you do this very frequently, I would advise you to consult CA
    4. Yes your parents can have PPF account and you can deposit money in the same. No problems in that. But interest on PPF in anyway tax free so this would not help in any additional tax benefit

• 1.What is the maximum amount can be gifted to parents or spouse ?
  2.Gifting amount will be taxable for us.

  • 1. There is no limit to what you can gift to your parents or spouse.
    2. The money you gift is anyway after tax deduction and there is no further tax on it.

    • Nice post..I didnt know parents are a boon lifelong..Keep adding such informative and engaging posts..

• You should have the same documents that is required for claiming HRA even if your landlord are your parents. You should have rent agreement and proof of actual transfer of money to your parents account along with rent receipt. This would make you strong as far as documentation is concerned!
  Also the money paid to parents should be shown as their income while filing their income tax returns.

• Dear Sir, how can I show to IT or organization HRA paying to parents , I mean every year we submit rent recept and agreement copy to our organization for processing of investment proof if we are staying in rented house so if we stay with parents is there any formalities of paper document