INVEST IN THE NAME OF MINOR CHILD
If you invest in your minor child's name, the income earned will be clubbed with your income and taxed under the clubbing provision. However, you could avail of a small exemption of `1,500 per child, per year for a maximum of two children. This means, you can invest `15,000 in a fixed deposit in your child's name, and for two kids, this amount can be `30,000 earning tax-free income every year.
INVEST IN THE NAME OF AN ADULT CHILD
After your child turns 18, he is treated as a separate individual as far as taxation is concerned. This means that if you gift him money and it is invested, the income will be considered his earning and will be subject to the same exemptions and deductions as any other adult taxpayer. It will not be clubbed with the parent's income.This means that if his income falls below the basic exemption limit, you could earn tax-free income on invest ments. An income of up to `2.5 lakh a year will be tax-free.
RAISE YOUR INVESTMENT LIMIT IN THE PPF
If you have exhausted your Section 80C exemption limit through other investments, you could separately invest up to `1.5 lakh a year in your child's PPF account. However, under clubbing provisions, the interest income will be clubbed with that of the parent and taxed.
TAX BENEFITS FOR MEDICAL TREATMENT OR FOR HANDICAPPED CHILD
Under Section 80DDB, you can claim tax benefit for medical expenses incurred for your child. The amount is `40,000 or the amount actually paid, whichever is lesser.This is only for specified illnesses or ailments. Also, under Section 80DDA, you could claim deduction for medical expenses incurred for a disabled child between `75,000 and `1.25 lakh, depending on the level of disability.
Top 10 Tax Saver Mutual Funds to invest in India for 2016
Best 10 ELSS Mutual Funds in india for 2016
1. BNP Paribas Long Term Equity Fund
2. Axis Tax Saver Fund
3. Franklin India TaxShield
4. ICICI Prudential Long Term Equity Fund
5. IDFC Tax Advantage (ELSS) Fund
6. Birla Sun Life Tax Relief 96
7. DSP BlackRock Tax Saver Fund
8. Reliance Tax Saver (ELSS) Fund
9. Religare Tax Plan
10. Birla Sun Life Tax Plan
Invest in Best Performing 2016 Tax Saver Mutual Funds Online
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