Father’s Day: Financial Investment Tips For New Fathers

Tax BenefitsWhat tax benefits are available to new fathers that can help with child-related expenses and maximise returns?Did you know, that as a new father, you can claim several tax deductions to manage child-related expenses under the old tax regime? Here’s what Manikanda S, a Tax Expert from ClearTax suggests:Education: When it comes to education, tuition fees are deductible under Section 80C. Each parent can separately claim up to Rs 1,50,000 per annum, significantly reducing taxable income. This includes fees for full-time education in India for up to two children.Under section 10 (14), you can benefit from tax exemption for a Children’s Education Allowance of Rs 100 per month per child, up to a maximum of two children, amounting to Rs 2,400 annually. For children staying in hostels, there is an exemption of Hostel Expenditure Allowance of Rs 300 per month per child, up to two children, totalling Rs 7,200 annually.Investments for Girl Child: If you have a girl child under 10 years old, the Sukanya Samriddhi Yojana offers tax-free returns and a deduction of up to Rs 1,50,000 under Section 80C only. To get this deduction, you can also invest in options like Unit Linked Insurance Plans (ULIPs) for children and National Savings Certificates. Holding your equity mutual fund for the long term can minimise tax liabilities while potentially increasing returns.Healthcare: Section 80D allows deductions for medical insurance premiums paid for dependent children within a limit of Rs 25,000, including Rs 5,000 for preventive health check-ups. For dependent children with disabilities or specific illnesses, Section 80DDB provides deductions for medical expenses and maintenance for disabilities, with a deduction of up to Rs 75,000, or Rs 1,25,000 for severe disabilities, amounts depending on the severity of the condition.“By leveraging these deductions, you can effectively manage and reduce your tax liability while ensuring your children’s needs are well-catered,” Manikanda states.

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