One of the rising population groups in India is of single women, and many of these women are opting to legally adopt children as well. According to UN Women, there are currently 13 million single mother households in India, and these women head 4.5 per cent of all households in India. Given this expanding demographic of single women with adopted children, it’s necessary to understand if there are any tax benefits these women can claim.
A recent report by MoneyControl reveals that although India doesn’t offer any tax credits to encourage people to legally adopt more children. However, single mothers can access regular tax benefits on child expenses for legally adopted children as well. Here are a few tax benefits single women with legally adopted children can claim.
Tuition fees: The tuition fees paid for the education of up to two children can be claimed under Section 80C. As long as you are contributing towards the educational expenses of your legally adopted child, this benefit can be claimed by single parents as well as unmarried guardians at a maximum of ₹1.5 lakhs.
Education loans: The payment of interests on educational loans for your legally adopted child can also be claimed under Section 80C. This goes for senior secondary education loans as well as for higher education loans, and there is no applicable limit on this exemption.
Hostel allowance: Hostel allowances for a legally adopted child staying away from home can be claimed by a parent. The limit, however, is up to ₹300 only and can be claimed for two children.
Leave travel allowance: The LTA is a travelling cost of vacations taken once every four years, and can be claimed by parents under Section 10(5). The benefit is for a parent’s biological children, stepchildren and legally adopted children, so single mothers can also access it.
Gifts: A legally adopted child can be exempt from taxation of gifts up to ₹50,000 in cash, vehicle, art or real estate as long as the gifts aren’t given by biological parents and relatives. This tax exemption falls under Section 56(2)(X) of the Income Tax Act. Any money earned out of these gifts by investing them further, however, will continue to be taxable.
Read more: Step-By-Step Guide Of Filing Your Income Tax Returns