- Date : 18/03/2022
- Read: 4 mins
Women and men need to understand their finances equally. A budget is the key to progressing in life. It keeps you on track with your income and expenses. You can also manage your taxes through it. What are the tax benefits for women in India? There are generally no special tax benefits for women in India, because income tax is a gender-neutral tax. Women, however, can take advantage of certain tax deductions to increase their income. The following are tax benefits for women that you can take advantage of.
Knowing your financials is equally important for both men and women. If you want to progress in life, you should know to budget - your income and expenses. It includes managing your taxes as well.
Do women have some extra tax benefits in India? Generally, income tax in India is gender neutral which means there are no special benefits for women. However, to increase their income, women can make available certain tax deductions.
Below is the list of tax benefits for women:
1.Sukanya Samriddhi Yojana (SSY) -
If you have a girl child, you can open an account for her. The amount you deduct will be eligible for a tax deduction. You can open an SSY account for your girl child below age 10, and you can deposit a maximum of Rs 1,50,000 every financial year in the scheme. The maturity is when she turns 21. However, premature withdrawal is allowed under certain circumstances. Currently, the Sukanya Samriddhi Yojana scheme offers a 7.6% rate of interest. The scheme has a 21-year maturity period. Another good part of the scheme, the interest and maturity amount both are tax-free.
2.Deduction on other investments -
You can use Section 80C and claim deductions up to Rs 1,50,000. There are multiple options to invest in under this section. The popular ones are PPF, life insurance, five-year tax deposits, ELSS mutual funds, etc. PPFs currently offer a 7.1% annual interest rate. The risk involved in PPFs is very minimal, and the returns are guaranteed to be risk-free. If you are looking for maximum return (over the long term) and minimum lock-in period, the best option to save tax is an investment in ELSS schemes.
3.Health insurance -
Everyone should have health insurance to protect themselves and their family. Another reason you should have health insurance is that the premium you pay towards health insurance is eligible for a tax deduction. The maximum deduction you can claim for health insurance is Rs 25,000 per year. You can make this payment for yourself, your spouse, children, or parents. Also Read: How To Avoid Health Uncertainties: Reason To Get Health Insurance.
4.Savings account -
If you earn interest from the money you hold in your savings account, you can claim deductions up to Rs 10,000. Most banks in India offer special account facilities for women that give you the option to open a zero-balance account. It would help if you made the most of it.
5.Allowance for house rent -
You can use the rent payment for tax benefits if you rent a place. The exemption depends on your rent amount, basic salary, allowance provided by the employer, and location. Check the details and claim the maximum possible deduction under this section.
6.Educational Loan -
If you have taken an educational loan, you can claim the tax benefits on the interest paid on loan. The loan can be in your name or your children's name. Exemption claims can be made up to 8 years or up to the interest payment. The biggest advantage here is no upper limit for the claim amount.
Also read: Why Taking An Education Loan Is A Better Option To Fund Your Child's Higher Studies?
7.Home loan -
In the current fiscal year, housing finance companies are likely to see a portfolio growth of 8-10% and 9-11% in FY 2022-23. If you have taken a home loan, you can claim deductions on the principal amount, stamp duty and registration charges under 80C of the Income Tax Act. You can claim additional deduction of upto Rs 200,000 for the interest paid on housing loan as a part of Income from House Property under Sec 24.
Ending Note
There are other ways to reduce your tax liability and increase your income, but the above ones are the easiest, and everyone should avail them. Unfortunately, the awareness among Indian women around tax saving is on the lower side. However, once she becomes aware of how and where to save taxes, she will become more independent.
Knowing your financials is equally important for both men and women. If you want to progress in life, you should know to budget - your income and expenses. It includes managing your taxes as well.
Do women have some extra tax benefits in India? Generally, income tax in India is gender neutral which means there are no special benefits for women. However, to increase their income, women can make available certain tax deductions.
Below is the list of tax benefits for women:
1.Sukanya Samriddhi Yojana (SSY) -
If you have a girl child, you can open an account for her. The amount you deduct will be eligible for a tax deduction. You can open an SSY account for your girl child below age 10, and you can deposit a maximum of Rs 1,50,000 every financial year in the scheme. The maturity is when she turns 21. However, premature withdrawal is allowed under certain circumstances. Currently, the Sukanya Samriddhi Yojana scheme offers a 7.6% rate of interest. The scheme has a 21-year maturity period. Another good part of the scheme, the interest and maturity amount both are tax-free.
2.Deduction on other investments -
You can use Section 80C and claim deductions up to Rs 1,50,000. There are multiple options to invest in under this section. The popular ones are PPF, life insurance, five-year tax deposits, ELSS mutual funds, etc. PPFs currently offer a 7.1% annual interest rate. The risk involved in PPFs is very minimal, and the returns are guaranteed to be risk-free. If you are looking for maximum return (over the long term) and minimum lock-in period, the best option to save tax is an investment in ELSS schemes.
3.Health insurance -
Everyone should have health insurance to protect themselves and their family. Another reason you should have health insurance is that the premium you pay towards health insurance is eligible for a tax deduction. The maximum deduction you can claim for health insurance is Rs 25,000 per year. You can make this payment for yourself, your spouse, children, or parents. Also Read: How To Avoid Health Uncertainties: Reason To Get Health Insurance.
4.Savings account -
If you earn interest from the money you hold in your savings account, you can claim deductions up to Rs 10,000. Most banks in India offer special account facilities for women that give you the option to open a zero-balance account. It would help if you made the most of it.
5.Allowance for house rent -
You can use the rent payment for tax benefits if you rent a place. The exemption depends on your rent amount, basic salary, allowance provided by the employer, and location. Check the details and claim the maximum possible deduction under this section.
6.Educational Loan -
If you have taken an educational loan, you can claim the tax benefits on the interest paid on loan. The loan can be in your name or your children's name. Exemption claims can be made up to 8 years or up to the interest payment. The biggest advantage here is no upper limit for the claim amount.
Also read: Why Taking An Education Loan Is A Better Option To Fund Your Child's Higher Studies?
7.Home loan -
In the current fiscal year, housing finance companies are likely to see a portfolio growth of 8-10% and 9-11% in FY 2022-23. If you have taken a home loan, you can claim deductions on the principal amount, stamp duty and registration charges under 80C of the Income Tax Act. You can claim additional deduction of upto Rs 200,000 for the interest paid on housing loan as a part of Income from House Property under Sec 24.
Ending Note
There are other ways to reduce your tax liability and increase your income, but the above ones are the easiest, and everyone should avail them. Unfortunately, the awareness among Indian women around tax saving is on the lower side. However, once she becomes aware of how and where to save taxes, she will become more independent.
