Spending on others can draw you tax benefits

Balwant Jain

Income tax laws provide you various benefits in terms of money spent or invested. Primarily, these benefits are available for the money spent on fulfilling your own needs. But they can be extended to the money you spend on your family members.

Here are tax benefits you can avail of when you spend on parents, spouse, siblings and children.

For parents

Section 80 D allows you an exclusive deduction of Rs25,000 paid for health insurance premium in respect of your parents whether financially dependent or not. In case, they are aged over 60 years, the deduction will be Rs30,000 in a year. Within the limit of Rs25,000, the law allows you a deduction of Rs5,000 per year for the amount spent on regular health check-ups. Note that the law does not allow you any deduction in respect of life insurance premium for your parents, even if they are dependent.

Deductions are also available under Section 80DD for expenses incurred on medical treatment of your dependent parents with the specified physical disability or for buying a life insurance policy for maintenance of such dependent parents. The deduction available is up to Rs75,000 and goes up to Rs1,25,000 in case the parent is suffering from any severe disability.

This deduction can also be claimed for siblings, children, or spouse in case they are suffering from any severe disease. Besides, a deduction under Section 80 DDB is also allowed up to Rs40,000 for expenses incurred on treatment of any of the family persons, including your parents suffering from some acute specified diseases. However, the deduction goes up to Rs80,000 in case the expenses incurred are in respect of a patient who is a senior citizen. Any reimbursement received up to Rs15,000 from your employer for medical expenditure incurred on your parents, siblings, spouse, yourself and children is also exempted.

The law allows you tax benefits in respect of Leave Travel Assistance (LTA) received from your employer, including the money spent on dependent parents as travel expenses while holidaying with you in India.

For siblings

The benefits of LTA and deductions under Section 80 DD and 80 DDB are also available for your siblings, children, and spouse who are dependent on you. The law does not envisage any tax benefits for your siblings under Section 80 C — be it insurance premium or school fee or even any investment. Even the benefit of interest on an education loan is not available in respect of your siblings.

For spouse

You can claim tax benefits in respect of LTA for travel with your spouse anywhere in India, even if the spouse is financially independent. In case the spouse is also receiving LTA benefits, the couple can draw benefit for holidaying every year as both of them can claim it in alternate year. You can also claim tax benefits in respect of medical insurance premiums paid for yourself as well as for your children up to Rs25,000.

You can also draw benefits for life insurance premium paid for your spouse and the amount deposited in the Public Provident Fund (PPF) account for your spouse. You can avail of the tax benefits in respect of interest paid on education for higher studies of your spouse, in addition to yourself and your children.

For children

You can claim various tax benefits for your children. You can claim deductions for life insurance premium paid for your children (whether dependent or not). But for claiming the benefits for medical insurance premium within the overall limit of Rs25,000, your children should be financially dependent on you. You can claim a deduction for tuition fees (school fees) and loan you paid for education of children.

The benefit of contribution to a PPF account of your children can be claimed, even if they are independent.

The benefits of National Saving Certificates and equity-linked saving certificates are available only for the taxpayer.

The author is CA, CS and CFP. He is working as Company Secretary at Bombay Oxygen Corporation Limited. The views expressed in this article are his own.