As the month of January prompts employees to submit income tax proofs, many individuals in the old tax regime find themselves familiar with traditional tax-saving tools under Section 80C. However, this article sheds light on lesser-known but effective methods that could significantly contribute to tax savings.
1- Pay House Rent to Your Parents:
- Unlocking HRA Benefits by Renting from Parents
If you reside with your parents and are ineligible to claim House Rent Allowance (HRA), consider paying rent to your parents. Section 10(13A) of the Income Tax Act allows for HRA deduction by showcasing your parents as tenants. Ensure no conflict with other housing tax benefits.
2- Give Interest to Parents:
- Tax-Effective Household Loans
Leverage the lower tax bracket of your parents by taking a loan from them for household expenses and paying interest. Obtain an attested certificate of interest payment to avail of tax exemption under Section 24B of the Income Tax Act, with a maximum discount of Rs 2 lakh.
3- Tax Exemption on Pre-Nursery Fees:
- Saving on Early Education Expenses
Despite being less popular, you can claim tax exemption on pre-nursery fees under Section 80C. This benefit, introduced in 2015, applies to fees for playgroup, pre-nursery, or nursery for a maximum of two children.
4- Health Insurance for Parents:
- Caring for Health and Wealth
Investing in health insurance for your parents not only safeguards their health but also offers tax benefits. Receive tax exemption on premium amounts up to Rs 25,000 for parents below 65 years and up to Rs 50,000 for parents above 65 years under Section 80D.
5- Tax Exemption on Medical Expenses of Parents:
- Relieving the Burden of Medical Costs
For individuals with parents aged 60 or more, tax exemption on medical expenses can be claimed under Section 80D. This provision allows a maximum tax exemption of Rs 50,000, providing financial relief for the significant medical expenses often associated with this age group.
In conclusion, these lesser-known avenues offer individuals additional opportunities for tax savings beyond the conventional Section 80C. Exploring these strategies can lead to optimized tax planning and increased savings in the current financial year.
