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By understanding the tax benefits that parents get due to small children and taking maximum advantage of them, the financial burden of the family can be reduced to a great extent. This can help children in securing a better future.
Employed taxpayers are entitled to certain allowances under section 10(14) of the Income Tax Act as part of the Cost of Company (CTC) structure to help fund the education costs of their children.
These allowances include education and hostel expenses.
Deduction of Rs 100 per month for each child, up to a maximum of Rs 2,400 per year for two children. This helps parents save on taxes.
In the hostel allowance, a deduction of Rs 300 per month for each child, and a maximum of Rs 2,600 per year for two children is ensured.
Section 80D of Income Tax gives the benefit of a tax deduction on health insurance premiums paid for children. The upper limit of the tax deduction for children, wife and self i.e. family in a health insurance policy is Rs 25,000.
Sections 80DD and 80DDB provide tax deductions for expenses incurred on medical treatment of children with disabilities or specific diseases.