How Women, Married or Single, can Save Income Tax?

A woman, whether married or single, can save income tax in huge amount if she plans carefully. Many women are unaware of their rights and duties under the Income Tax Act, 1961 and are, therefore, unable to find legal ways to save Income tax by proper tax planning through multiple allowances, deductions, rebates, and reliefs. Some of the most critical aspects for Saving Income Tax are listed below-

A woman can be an Independent tax payer

A woman can be an independent tax payer in her own right, just like a man. Her earnings do not need to be added with her husband’s earnings. If a woman’s net income for the financial year does not exceed 2,50,000 (Rs 3,00,000 for senior citizens or Rs 5,00,000 for very senior citizens), she does not have to pay any income tax. As a result, a women taxpayer receives the same tax advantage as a male.

Read Also:  10 mistakes to avoid while Filing Income Tax Return

Avoid Receiving Gifts from 3 Types of Relatives

Women can receive gifts from her family and friends. Cash gifts as well as gifts in kind in excess of Rs 50,000 from non-relatives in a financial year are taxable as “Income from other Sources”.  However, cash gifts as well as gifts in kind can be received in a Financial year from a “relative” without any limit with no income tax liability at all. 

Her husband, her brothers and sisters, brothers and sisters of her husband and of her parents, lineal ascendant or descendant of self and husband along with their spouses are all relatives of a woman. A woman, on the other hand, should not accept gifts from three relatives: her husband, (ii) her father-in-law, and (iii) her mother-in-law.

This is because, according to Section 64 of the Income Tax Act, any gift received from these three groups of family, whether in cash or in kind, will be liable to be included in the donor’s income. As a result, a woman should avoid accepting gifts from these relatives. An unmarried woman, on the other hand, can accept gifts of up to Rs 50,000 from her future husband because he is not subject to Section 64 of the Income Tax Act. Non-relatives’ gifts in kind, such as land, jewelry, bonds, and so on, will be taxed as income if they exceeded Rs 50,000.

Read Also: Save Income Tax on Mutual Fund Redemption

Avoid accepting salary from a business in which your husband has an interest

A woman should avoid taking a salary from a company in which her husband has a significant interest, such as a proprietorship enterprise or one in which he has more than 20% of the profits. A woman should avoid taking a salary from a company in which her husband has a significant interest, such as a proprietorship enterprise or one in which he has share of more than 20% of the profits.

In case, a woman has technical or professional qualifications and earns a salary in the course of her duties as a result of her qualification, no addition would be made in the income of the husband in respect of salary received by a woman.  

Read Also:5 Home Loan tax benefits u/s 24, 80C, 80EE, 80EEA of Income Tax Act

Woman can own a House in her own name

A woman can buy a house or a flat in her name and get it accepted as such by the Income tax department. She may even own house as a co-owner with her husband or some other close relative. Under the provisions of Section 26 of the Income Tax Act, a woman will be treated as a separate co-owner in her own capacity if she finances the house herself, either by a loan or other means. 

Read Also: New Income Tax Rates & existing Income Tax Rates : Quick comparison

Other Ways to Save Income Tax available to Woman

Just like men, women can take the following deductions as well-

1.  Sukanya Samriddhi Yojana (SSY)

Women can open an SSY account for a girl child below the age of 10 years. As a parent/ legal guardian, they can deposit up to Rs1,50,000 and earn a fixed return until the child is 21 years old. Both the interest and maturity amount are tax-free. 

2. Deductions on other investments

Under Section 80C of the Income Tax Act, deductions of up to Rs 1,50,000 can be claimed on life insurance, PPF, stamp duty, and registration charges, five-year bank deposits, Senior Citizens Savings Scheme, home loan repayment, NPS, etc

Read Also: LIC under Income tax – Deduction, taxability & TDS on Maturity

3. Health insurance

Under the Income Tax Act, an individual who has taken health insurance can claim deductions of maximum Rs25,000/year for payment of insurance premium. This payment can be for herself, her spouse, her children, and her parent.

 4. Savings account

Deductions of up to Rs 10,000 (Rs 50,000 for senior citizens) are allowed on interest earned on a savings account. There are special account facilities available for women in several banks, which offer perks like zero balance accounts. 

Read Also: Tax on Interest Income – Saving Account, PPF, Fixed Deposits, bonds, R/D

5. Allowance for house rent

If one is living in a house that is rented, they can utilize their rent allowance for tax benefits. The exemption depends on basic salary, allowance provided by the employer, rent amount, and location. 

6. Educational Loan

Interest paid on loan availed for completion of senior secondary education can be claimed for tax benefits. The loan can be for the individual, spouse, or children. Exemption claim can be made up to 8 years or up to payment of interest. Fortunately, there is no upper limit for the claim amount.

Read Also: Taxation of Hindu Undivided Family under Income tax

The author of above article is Riya Thawani.

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