In India, family is not defined solely by blood relation but it consists of the people, who support and love you, and the people you can confide in and trust. Your family acts as a support mechanism that not only helps you in meeting your social and personal needs but also helps you in saving income tax as well. There are certain tax benefits by way of which you can increase you tax savings through your family.
Let us take a look at some of relevant provisions which can help you save tax:
1. Medical Insurance
Section 80D allows Individuals and HUFs to claim deduction upto Rs. 25,000 for medical insurance premium paid for self and family. Moreover this limit of Rs. 25,000 includes a sub limit of Rs. 5,000 spent on preventive health checkup. Thus effective limit available for health insurance premium comes to Rs. 20,000 in case you are availing tax benefit of preventive health checkup.
In addition to this, similar amount is available separately for parents and limit is increased to Rs. 30,000 in case of senior citizens. Health insurance premium paid in excess of these limits cannot be claimed under Section 80 D in most of the cases where only one spouse is working. However in case your other partner is also working, the health insurance can be bought in such a way so as to ensure that both the spouse are able to claim the benefits of Section 80D while ensuring that the entire family has adequate health insurance cover.
2. Tution Fees
As per the income tax laws you can claim deduction for tuition fees incurred in any university, college, school or educational institution in India in respect of full-time education of two of your children up to an amount of Rs. 1.50 lakhs in a year along with other items like PPF, ULIP and PF etc. under Section 80C. Since this allowance is available in respect of two children per assesssee and if there are more than two children, the other spouse can claim these expenses for additional two children as the limit of two children is applicable assesse wise and not for each family. Even in case you do not have more than two children but the expenses under section 80C per year exceed Rs. 1.5 lakhs in a year these expenses can be divided between two parents to maximize the claim amount as a family.
3. House property
As per the present provisions of the taxation of income from house a person is allowed to have one property for self-occupation and thus does not pay any tax on that. However in case one owns and uses more than one house property, the owner has to show notional rent in respect of such additional property for taxation purposes though he has not received any rent. In case other spouse is also earning the additional property can be held in his/her name and thus between husband and wife two properties can be treated as self -occupied the need to offer any amount of notional rent for taxation.
4. Home Loan
Section 80C of the income tax act allows an individual or an HUF to claim deduction on certain items like Life Insurance Premium, Provident Fund and repayment of housing loan. With increasing property prices and higher home loans taken, the amount of principal repayment itself exceeds the maximum limit of Rs. 1.50 lakhs. Effectively, most of the home loan borrowers are not able to claim the full benefit of home loan principal repayment under Section 80C.
However, in case the other spouse is working, the home loan repayment can be claimed by both of them if they are joint owners and co-borrowers. With restriction on set off of losses under the head income from house property against other incomes upto Rs.two lakhs, it makes sense for both the spouses to become joint owners and co borrowers of home loan to become eligible to claim the benefit of set off of upto Rs. 2 lakhs in each spouse’s ITR.