Your Child Can Provide You Relieve from Tax

Giving best to our children is our utmost priority in spite of the sky-rocketing prices and growing expenses. Investing in their future is one of the major concerns for every parent. But child plan investment can give you Income Tax benefits along with a bright future to your children. There are seven advantages that you can relish on many expenses and investments made on your child’s name.

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Investing in your child's future:Nothing is more important than securing your child's future
Benefits of Investing In Child Plan
Waiver of Premium Benefit
Future Premiums are paid by the insurer upon death of policyholder
Flexible Payout Options
Your premiums help your child achieve their dreams through lump sum or regular payouts
Wealth Boosters
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Zero Commission
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Tax Benefits^
You get tax benefits under Section 80(C) and no tax on returns under Section 10 (10D)
Investment Flexibility
It offers the flexibility to invest at regular intervals or as a one-time contribution
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Invest ₹10k/month your child will get ₹1 Cr# Tax-Free*

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Interest on Education Loan:  Pre-planning for children’s higher studies has become very essential as getting education is becoming more and more expensive. Taking up a loan is the option that most of us go for. But it leaves us with a burden of repayments. While coping up with repayments, one can partially gain from this investment as the interest portion on education loan is completely tax deductible under section 80 E.  The loan taken up must be for a full-time graduate course.

Health Insurance Premium: The premium paid for health insurance that we take for our children can be claimed as a deduction, up to Rs 15000 under section 80D in a year.

Payment of Tuition fees: The tuition fee that most schools, colleges and universities have in India can be deducted under section 80 C up to R1 lakh in a year. Restricted to two dependent children, the amount of deduction should pertain to the actual paid tuition fee. Each parent can claim the benefit for up to two children as husband and wife have a separate limit.

Expenses on treatment of disabilities and certain ailments: If any parent has spent any amount for the treatment of specific disabilities and illnesses of his child then he can claim deduction from his income under two sections – 80DD and 80DDB. According to section 80DD, the expenses incurred towards medical treatment of dependent children suffering from a disability are entitled for deduction.  For a normal disability, the limit of deduction is Rs 50,000 (impairment of at least 40%). For severe disability, the limit is Rs 1lakh (impairment of 80% and above).

According to section 80 DDB, the expenses incurred towards treatment of specified illnesses for children can be deducted up to Rs 40,000.

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Deduction of allowances: A mass of allowances paid for expenses aiming the children is specified by the tax law which are allowed by an employer as an income tax deduction of the employee. It includes hostel allowance of Rs 300 per month per child, up to a maximum of two children. The second one is an education allowance in which Rs 100 per month per child is exempted from income up to a maximum of two children. Third one is medical expenses incurred for dependent children. This expense is allowed as a deduction of up to Rs 15,000 per year on showing medical bills.

Minor child’s income: The income earned from the investments made in our child’s name will be clubbed with your income. However, a claim up to Rs 1,500 as a deduction on this income can be made if the investment anywhere in a minor child's name generates an income. For example, investment of up to Rs 15,000 in bank FDs offer an annual return of 10% and is exempted from tax.

Formation of a trust: Setting up a trust in a minor child's name can save tax. You just need to make an irreversible transfer to the trust so that the money will not be claimed. The income made through the investments will be allowed for tax deductible. However, the trust has to pay tax on this income but if the income is clubbed then the total tax liability will be lower.

˜Top 5 plans based on annualized premium, for bookings made in the first 6 months of FY 24-25. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%
+Returns Since Inception of LIC Growth Fund
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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