Save Taxes, Secure Your Child’s Future: The Smart Way to Invest
To save taxes and build a secure financial future for your child, consider a combination of government-backed schemes, insurance products, and mutual funds. Starting early is key to maximizing the power of compounding and accumulating a substantial corpus over time.
As a parent, you want to give your child the best possible start in life. Investing in their education can be a great way to do that. But did you know that there’s a way to save taxes while investing for your child’s future?
The Tax-Saving Strategy: Minor Mutual Fund Account
Opening a minor mutual fund account in your child’s name can be a tax-efficient way to invest for their education. Here’s how it works:
The income is taxed in the higher earning parent’s hands until the child turns 18.
After the child turns 18, the gains are taxed in their hands, not yours!
Since your child is likely to be in a lower tax bracket, they can benefit from:
– â‚ą1.25 lakh LTCG exemption
– â‚ą4 lakh basic exemption limit
– That’s â‚ą5.25 lakh in tax-free gains!
Benefits of Investing in a Minor Mutual Fund Account
Tax savings: Reduce your tax liability and maximize your returns.
Flexibility: Invest in a variety of assets, such as equity or mutual funds.
Long-term growth: Give your child’s investments time to grow and compound.