What are the plans?
Tax saving schemes, schemes like mutual funds, PPF and Sukanya Samriddhi scheme allow you to save money for children and save tax on the investments you have made.
PPF is a good option
PPF is one of the most popular small tax saving schemes offered by the government. This is one such loan scheme that provides a fixed return on the amount deposited every year. These schemes are under the exempt-exempt-exempt (EEE) category, which means that the investment, returns and maturity made in these schemes are tax-free. All of your contributions to these resources are tax-deductible.
Sukanya Samriddhi Yojana
Sukanya Samriddhi Yojana is one of the most popular tax saving schemes of the government. This is a credit policy. It provides a fixed return on the amount invested every year. These schemes also fall under the exempt-exempt-exempt (EEE) category, which means that the income, returns and maturity generated in these schemes are tax-free.
Regulations of Sukanya Samriddhi Yojana
Sukanya Samriddhi for people is for one daughter, that is, you can invest in this scheme in your daughter’s name. The account should be opened before your daughter turns 10. The SSY account matures when the daughter turns 21, but you have to deposit for 14 years only. You can make an early withdrawal of up to 50% in the age of 18 for the purpose of marriage or higher education. For the second quarter of FY 2022-23, the SSY account pays an interest rate of 7.6%.
Tuition Fee Discount
Apart from these government policies, parents can also claim tax exemption on the fees they pay on behalf of their children. This deduction is also given under section 80C and the limit for deduction is Rs 1.5 lakh per annum. In addition, a salaried taxpayer can claim a deduction of Rs 100 per month for each child in the name of education expenses and Rs 300 per month for hostel fees (maximum of two children if only one parent is a taxpayer, or maximum of Rs. three children if (both parents are taxpayers.)