The Government offers additional tax benefits for women to encourage them to work. Women’s contribution to India’s GDP, when compared to men, is significantly lower than the global average. Women empowerment makes no sense without financial independence.
Women can save the money they get through tax benefits and make that money work and contribute to wealth creation. Let’s see the income tax benefits women enjoy.
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Women don’t enjoy any special tax benefits, vis-a-vis men. But, sound tax planning ensures a good amount of saving. To make the best use of the tax benefits available on various investments and expenses, a woman must know her risk appetite, expectation of returns and liquidity of investments. After she is clear on these aspects, she can invest money in various tax saving instruments. This will go a long way in achieving financial goals like retirement, children’s education and so on.
Section 80D of the Income Tax Act, 1961, can help save a considerable amount in tax. You get a tax deduction of up to Rs 25,000 a year on Health Insurance premiums paid for self, spouse, children and parents. You can claim a tax deduction of Rs 50,000 if you pay health insurance premiums for parents who are senior citizens. If a woman pays health insurance premiums for herself or any of the eligible family members, she can claim tax deduction while filing income tax returns.
Section 80C is very popular and the favorite of many tax payers. Women can also take advantage of the tax benefits available under Section 80C. The only problem is the ceiling limit of this section. You can invest in like PPF, NSC, SCSS and also VPF, EPF, ELSS, tax saver FDs and so on, to get a collective deduction of up to Rs 1.5 Lakhs in a financial year.
Sukanya Samriddhi Yojana is a great small saving scheme for a girl child’s welfare. SSY account can be opened only in the name of a girl child. It can be opened only by the father/mother or a legal guardian nominated under the scheme. Any contributions made by parents/guardian to an SSY account, are eligible for tax deductions. The only condition is that a maximum of Rs 1.5 Lakhs can be invested in the SSY account each year. Tax deductions to a maximum of Rs 1,50,000 a year, can be claimed under Section 80C.
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Sovereign Gold Bonds are government securities which can be held in the place of physical gold. SGBs are denominated in grams of gold. If you want to invest in an SGB, you have to pay the issue price in cash and redeem bonds in cash on maturity. SGBs are issued by the Reserve Bank of India.
If you invest in gold, the sale of gold attracts:
Profits got on redeeming SGBs are completely tax-free. The interest earned on SGB at 2.5% per year is taxed according to your slab rate.
You can also park your money in savings bank accounts. However, make sure you invest in line with liquidity requirements because, as women, liquidity is needed to meet regular expenses. The interest income earned on a saving banks account is eligible for a deduction of up to Rs 10,000 under Section 80TTA in a financial year. Hence, your taxable income reduces to that extent.
See Also: Income tax return status
If you avail a Home Loan in your name and not in your husband’s name, then you are entitled to claim tax deductions of Rs 1,50,000 towards principal repayment under Section 80C and Rs 2,00,000 towards interest payment under Section 24b.
Additionally, if a home loan is availed jointly or in the woman’s name only, banks offer lower interest rates. Women can also enjoy a significant discount on stamp duty for registration of a property if it is bought in their name.
If you avail an Education Loan, you can claim a tax deduction under Section 80E towards interest payments. To enjoy the tax benefits, an Education Loan must only be availed for self, spouse or children’s higher education.
Even though there are no special tax rebates or benefits specific to women, you can make the best use of the above-mentioned sections. Remember that saving taxes requires financial planning, investment planning and tax planning. If you don’t plan well, you can forget saving taxes.
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