In India, the tax provisions for salaried women are similar to that for salaried men. A few years ago, there used to be an additional rebate of Rs. 5,000 for women, but now that has been withdrawn. So there are no tax benefits for women. Having said that, there are numerous ways in which women can save tax in India.
Health insurance: Section 80D of the Income tax act allows a tax deduction of up to Rs. 25,000 per year for paying health insurance premium with an additional deduction of Rs. 5000 for policies purchased by or for senior citizens. The good part is this benefit is applicable not only for your own health insurance premium but also for health insurance premiums paid for your spouse, children and parents. So by taking a good health insurance policy for yourself and your loved ones, you can not only minimize your healthcare expenses but also get tax savings.
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Related: 9 Rules of Buying Health Insurance That Could Save You A Lot of Money [Video]
Tax saving options: Section 80C of the Income Tax Act allows for a deduction of up to Rs. 1,50,000 for investing in tax-saving options. These options include Public Provident Fund (PPF), Employee Provident Fund (EPF), Equity-linked Saving Schemes (ELSS), etc.
If you have a girl child under 10 years, you can benefit from the recently launched Sukanya Samridhi Yojna. You can deposit up to Rs. 1,50,000 each year under this scheme and get a fixed return of 9.2%. Both the interest and maturity amounts under this scheme are tax free. The lock in period for this scheme lasts as long as the girl (who is the account holder) turns 21 years of age, unless the girl gets married, in which case a total withdrawal is possible. A premature withdrawal of up to 50 per cent can be done after 18 years of age for the purpose of her higher education.
Section 80C also allows you to get tax benefits by investing in life insurance plans. These can be either traditional life insurance or unit-linked insurance plans (ULIPs). By choosing a good insurance plan, you can not only provide financial protection to you and your family, but can also help save tax in India.
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The choice of investments under section 80C will vary by individuals. For example, women who are working for Government enterprises (either State or Central) don’t have to worry about pension and Employee Provident Fund. So for such women, ELSS or life insurance is an ideal choice of investment.
Take a home loan: Taking home loan can also offer tax benefits for women on both, the principal and interest components of the loan.
Section 80C also allows tax exemption of up to Rs. 1,50,000 a year for principal paid on housing loan. While section 24 provides a tax deduction of up to 2 lakhs per year on the interest on home loan. And if it’s a second home or a property not occupied by self, there’s no limit on the tax deduction to be claimed on the interest amount.
If you’re a first-time home buyer, budget 2016 has some more good news for you. You can get an additional deduction of Rs. 50,000 on the interest component on a loan of up to Rs. 35 lakhs. The only conditions here are that your house value should not be more than 50 lakhs and it should be your first residential property purchase.
Take an education loan: Under section 80E, you can get a tax exemption of up to Rs. 150,000 each year for interest paid on education loan for seven assessment year after taking the loan or until repayment of the loan. The loan can be taken for the education of self, spouse or children.
Conclusion
There are various ways in which women can save tax in India, be it by taking advantage of the provisions of Section 80C by making suitable investments or through health insurance. 80C investments are typically long-term investments that can provide you varied returns, based on your choice of investments. Note, these investments have a minimum lock-in period of 3 years. On the other hand, health insurance will protect you and your family from the financial burden of any health emergencies.
To conclude, you need to assess your short-term and long-term financial goals and match them with your tax-saving objectives to determine which tax saving option is the best for you.
