There is currently a provision in the Indian income tax law that allows you to claim an amount for the education expenses you incur if your dependent children attend full-time school. Under section C, you are allowed to claim a deduction of up to ₹ 1.50 lakh. In the case of a family with more than two children, the other spouse can also claim these expenses for up to two additional children since the limitation of two children is applicable to a taxpayer, not to a family.
The income tax act of 1961 defines the word ‘dependent’ in a manner that does not prescribe a monetary value for the child’s dependency. It also prescribes standards that must be met to be eligible for claimant status as a dependent. There are ways in which a tax assessee can obtain a tax benefit by incurring a tax expense in the name of a dependent that the assessee may wish to claim. Similarly, several provisions have been made in the Income Tax Act, 1961, pertaining to the tax savings or deduction schemes of the assessee who spends money on the dependents, which have been included in the Act.
Who Can Be Claimed as a Dependent
The term ‘dependent’ refers to the individual who is dependent upon the assessee for their survival as an individual. It should be understood that the dependent must be relative to the assessee, such as a spouse, children, brother, or other relatives. As a consequence of this, no third party can be claimed as a dependent. In the income tax act of 1961, the term ‘relative’ was discussed broadly, stating that a relative is a person who can be a husband, wife, sister, brother, or any lineal descendant of the ancestor.
Suppose the assessee’s parent(s), spouse, children, brothers, and sisters are individuals and entirely or primarily reliant on them for their maintenance and well-being. In that case, they are eligible for this program. If you are a member of a Hindu Undivided Family (HUF), you can claim your child as a dependent if you meet specific requirements. Spending money on dependent children can provide the assessee with many tax benefits as the expenditure made on these dependent children can be claimed under sections 80C, 80D, and 80DD of the Income Tax Act, 1961.
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Child Dependency Provisions
As a general rule, in India, a child (son) can be claimed as a dependent until they start earning for himself. However, if the child is a daughter, the dependent’s claim will apply until the daughter earns for herself or gets married, depending on which is earlier, regardless of age.
The same holds if the child is differently-abled or suffering from a permanent disability both physically and mentally. They can be claimed as dependent, regardless of their age. In this case, the word ‘child’ includes both the step-child and adopted child.
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Certain criteria must be met for dependency when a government employee dies, as outlined by the Central Government Health Scheme (CGHS). In the case of a deceased government employee, it is specified that the son is entitled to dependency until the age of 25 or until he starts earning or gets married, whichever occurs first. It is possible to consider a son as a dependent even after the age of 25 years old if he has any permanent disability.
It refers to a disability such as blindness, low vision, mental retardation, hearing impairment, etc. The daughter is also eligible until she earns money or marries. In 2014, the government amended the rules for divorced daughters. The divorced daughter will now be eligible for the family pension. Still, the divorce proceedings must be conducted during the employee’s lifetime, and the divorce must occur after their death.
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Tax Benefit for an Assessee
Section 80D provides a health benefit of deducting up to ₹ 25,000 for dependent children. Similarly, if the children are differently-able or wholly dependent, the expenditure made on them can be claimed under section 80DD of the income tax act.
The tax benefit under section 80DD differs upon the rate of disability of the dependent person. If the disability of the dependent person is between 40% to 80%, then the tax benefit will be up to ₹ 75,000 for the tax assessee. If the disability rate is above 80%, then the tax deduction of ₹ 1,25,000 can be availed.
Conclusion
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