How Can Women Save Tax In India?
A woman, whether married or single, can save a great deal of income through proper tax planning. However, many women are ignorant of their r...
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A woman, whether married or single, can save a great deal of income through proper tax planning. However, many women are ignorant of their rights under the Income Tax Act and do not know the legal methods of saving tax.
Before we discuss different ways to save tax, let's first understand different slabs under which your income falls in the assessment year 2016-17:
• Tax rebate has been increased to Rs 5,000 in case of individuals earning below Rs 5 lakhs
• 3% education cess is levied on income
• If the earnings are over Rs 1 crore, the surcharge has been increased to 15%
Now that you know the different tax slabs, here are ways through which a woman can save a good deal of their income.
1. Section 80D: You can secure your health and enjoy tax benefits also. The Section 80D allows a certain tax deduction, which would amount to Rs 25,000 per year for paying health insurance premium. An additional tax benefit of Rs 30,000 is given if the policy is bought for senior citizen parents.
The above deduction can also be claimed if you are purchasing a top up or super top up mediclaim insurance policy.
2. Section 80DD: Under the Section 80DD, you can claim a tax deduction up to Rs 75,000 on the medical expenses incurred on the treatment of dependents who have 40% or more disability. The tax limit is Rs 1.25 lakhs in case the disability is over 80%.
3. Section 80DDB: Any medical expenses incurred in respect of critical ailments either on self, spouse, children, and parents are eligible for tax benefits up to Rs 40,000. For senior citizens between 60 years and 80 years, the deduction limit is Rs 60,000 and for super senior citizens (above 80 years), the tax limit is Rs 80,000. Some of the critical ailments which are covered under this section are chronic renal failure, hemophilia, thalassemia, and cancer.
4. Opt for a home loan: By availing a home loan, women can get benefits on both the principal and the interest component of the loan.
Also, if you have taken a home loan for the first time, you can get an extra tax benefit of Rs 50,000 on the home loan interest, provided the following conditions are fulfilled:
• Home loan should be sanctioned in the financial year 2016-17
• The amount of home loan should not be more than Rs 35 lakhs
• House value should be less than Rs 50 lakhs
• Home buyer should not have any property registered in his/her name
However, you either have to be an owner and a borrower to claim benefits. If either of these titles is missing, you are not entitled to get any benefit. Similarly, if you own a property with your husband, you can claim tax benefits only if your name is there in the loan book as a co-borrower.
5. Education loan: If a taxpayer has taken an education loan for higher studies of herself, spouse, or children, then she can claim deductions up to Rs 1,50,000 for interest paid on education loan under section 80E. This deduction is only allowed for the repayment of interest and not for the repayment of the principal education loan. The deduction is given on education loan for seven assessment years after availing the loan or till the repayment of the loan.
6. Other tax-saving options: Section 80C gives tax deductions up to Rs 1.5 lakhs for investing in various tax saving options. Some of the options which fall under this section are:
• Public Provident Fund (PPF)
• EPF (Employees Provident Fund)
• Post office tax saving deposits
• National Savings Certificate (NSC)
• Equity Linked Savings Scheme
• Kid's tuition fees
• Senior Citizen Savings Scheme (SCSS)
• Home loan principal repayment
• National Pension Scheme (NPS)
• Life insurance premium
• Sukanya Samriddhi Scheme
7. Section 80G: By making donations towards certain relief funds and charitable organizations, you can get tax benefits. Only donations made in cash and cheque are eligible for tax benefits. Any donations in kind do not get the tax advantage.
8. Section 80GG: If you do not own a residential house, nor get the HRA from your company, you can get tax benefits up to Rs 60,000.
Conclusion
Though a certain tax outgo is essential; you can save your money by investing prudently. You need to carefully assess your short-term and long-term financial needs and match them with your tax-saving goals to decide where to park your funds. Also, keep the following points in mind to avoid tax hassles at the last minute:
• Timely submit all your investment proofs to get tax deductions
• Carefully review the Form 16 received from your company
• Don't wait until 31st March to start your tax planning
Contributed By: Madhumita
Before we discuss different ways to save tax, let's first understand different slabs under which your income falls in the assessment year 2016-17:
| Income Range | Individuals who are below 60 | Senior Citizens (above 60 years but below 80 years) | Very Senior Citizens (aged 80 years and above) |
| Up to Rs 2,50,000 | Nil | Nil | Nil |
| Rs 2,50,001 to 3,00,000 | 10% of total income exceeding Rs 2,50,000 | Nil | Nil |
| Rs 3,00,001 to 5,00,000 | 10% of total income exceeding Rs 2,50,000 | 10% of total income exceeding Rs 3,00,000 | Nil |
| Rs 5,00,001 to 10,00,000 | Rs 25,000 + 20% of total income exceeding Rs 5,00,000 | 20,000 + 20% of total income exceeding Rs 5,00,000 | 20% of total income exceeding Rs 5,00,000 |
| Above Rs 10,00,000 | Rs 1,25,000 + 30% of total income exceeding Rs 10,00,000 | Rs 1,20,000 + 30% of total income exceeding Rs 10,00,000 | Rs 1,00,000 + 30% of total income exceeding Rs 10,00,000 |
• Tax rebate has been increased to Rs 5,000 in case of individuals earning below Rs 5 lakhs
• 3% education cess is levied on income
• If the earnings are over Rs 1 crore, the surcharge has been increased to 15%
Now that you know the different tax slabs, here are ways through which a woman can save a good deal of their income.
1. Section 80D: You can secure your health and enjoy tax benefits also. The Section 80D allows a certain tax deduction, which would amount to Rs 25,000 per year for paying health insurance premium. An additional tax benefit of Rs 30,000 is given if the policy is bought for senior citizen parents.
| Cases | Self, Spouse, and Kids | Parents (whether dependent or not) | Total tax deduction |
| Everyone in the family is below 60 | Rs 25,000 | Rs 25,000 | Rs 50,000 |
| Except parents, everyone is below 60 | Rs 25,000 | Rs 30,000 | Rs 55,000 |
| All family members are above 60 | Rs 30,000 | Rs 30,000 | Rs 60,000 |
The above deduction can also be claimed if you are purchasing a top up or super top up mediclaim insurance policy.
2. Section 80DD: Under the Section 80DD, you can claim a tax deduction up to Rs 75,000 on the medical expenses incurred on the treatment of dependents who have 40% or more disability. The tax limit is Rs 1.25 lakhs in case the disability is over 80%.
3. Section 80DDB: Any medical expenses incurred in respect of critical ailments either on self, spouse, children, and parents are eligible for tax benefits up to Rs 40,000. For senior citizens between 60 years and 80 years, the deduction limit is Rs 60,000 and for super senior citizens (above 80 years), the tax limit is Rs 80,000. Some of the critical ailments which are covered under this section are chronic renal failure, hemophilia, thalassemia, and cancer.
4. Opt for a home loan: By availing a home loan, women can get benefits on both the principal and the interest component of the loan.
| Rules | Section 24 | Section 80C |
| Tax benefit is given for | Repayment of interest | Repayment of principal amount |
| Basis of tax deduction | Accrual basis | Paid basis |
| Maximum tax deduction | Rs 2 lakhs for self-occupied property. There is no limit on rented property | Rs 1.5 lakhs |
| Objective of taking a loan | Purchase, construction, repair, or reconstruction of a house property | Purchase, construction of a new house |
| Eligibility criteria for availing benefits | Purchase or construction of the house should be completed within five years of taking the loan | None |
| Restriction in case the property is sold | None | If the property is sold within five years, tax benefits would be reversed |
Also, if you have taken a home loan for the first time, you can get an extra tax benefit of Rs 50,000 on the home loan interest, provided the following conditions are fulfilled:
• Home loan should be sanctioned in the financial year 2016-17
• The amount of home loan should not be more than Rs 35 lakhs
• House value should be less than Rs 50 lakhs
• Home buyer should not have any property registered in his/her name
However, you either have to be an owner and a borrower to claim benefits. If either of these titles is missing, you are not entitled to get any benefit. Similarly, if you own a property with your husband, you can claim tax benefits only if your name is there in the loan book as a co-borrower.
5. Education loan: If a taxpayer has taken an education loan for higher studies of herself, spouse, or children, then she can claim deductions up to Rs 1,50,000 for interest paid on education loan under section 80E. This deduction is only allowed for the repayment of interest and not for the repayment of the principal education loan. The deduction is given on education loan for seven assessment years after availing the loan or till the repayment of the loan.
6. Other tax-saving options: Section 80C gives tax deductions up to Rs 1.5 lakhs for investing in various tax saving options. Some of the options which fall under this section are:
• Public Provident Fund (PPF)
• EPF (Employees Provident Fund)
• Post office tax saving deposits
• National Savings Certificate (NSC)
• Equity Linked Savings Scheme
• Kid's tuition fees
• Senior Citizen Savings Scheme (SCSS)
• Home loan principal repayment
• National Pension Scheme (NPS)
• Life insurance premium
• Sukanya Samriddhi Scheme
7. Section 80G: By making donations towards certain relief funds and charitable organizations, you can get tax benefits. Only donations made in cash and cheque are eligible for tax benefits. Any donations in kind do not get the tax advantage.
8. Section 80GG: If you do not own a residential house, nor get the HRA from your company, you can get tax benefits up to Rs 60,000.
Conclusion
Though a certain tax outgo is essential; you can save your money by investing prudently. You need to carefully assess your short-term and long-term financial needs and match them with your tax-saving goals to decide where to park your funds. Also, keep the following points in mind to avoid tax hassles at the last minute:
• Timely submit all your investment proofs to get tax deductions
• Carefully review the Form 16 received from your company
• Don't wait until 31st March to start your tax planning
Contributed By: Madhumita
