Empowering Women’s Finances: Tax Benefits in India

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Today, in India, women have more opportunities to earn and invest than ever before. In previous times it was unheard of for a woman with earning potential in India. It is no wonder that women are making great strides in their careers and managing the finances of their families while caring for their homes. Women in India, with all the opportunities of investing before them, can also save on tax payments. Be it on investments like buying a home or other financial products, there are ways for women to get some tax deductions that add up to savings. In this blog, let’s have a look on the tax benefits for women in India that empowering women’s finances.

Tax Deductions on Home Loans

For instance, if women take loans to buy homes, under Section 80C and under Section 24B of the Indian Income Tax Act, respectively, women get tax deductions, on both the principal loan repayments and the interest repayments, respectively. On your principal home loan repayment, you can get up to Rs. 1.5 lac as a tax deduction (from your total income). As far as your loan repayment interest goes, you get a deduction of Rs. 2 lac, depending on the kind of property you buy. These deductions are available to you if you are filing your income tax returns under the old regime. 

In case you are filing tax returns under the new regime, you can only claim deductions on interest payments and let out property. 

Additional Read: Home Loans for Women in India

Salaried Women and Property Tax Benefits and Savings

If you are a woman earning a salary, you may be eligible for HRA (House Rent Allowance) as part of your employment package. If you are living on rent, and get the benefit of HRA, then you are permitted to claim deductions on the lowest component of your HRA. You are allowed to claim deductions of tax on either of these (whichever is the lowest amount): 

  • On the actual HRA
  • 50% of your basic salary plus dearness allowance (50% for living in a metro, and 40% for living in a non-metro)
  • Claim deductions on actual rent paid minus 10% of your basic salary plus dearness allowance

Women in India are encouraged to buy property or hold property in their names. This is a right for women in India, and also a way for women to gain a sense of security and self-esteem. Apart from this, with a view to encouraging women to take the lead in property purchase, many states of India require women to pay less stamp duty than men. For instance, in New Delhi, the stamp duty for men is 6% while for women it is 4%. Furthermore, while buying homes and taking loans, women get opportunities to avail loans with lower interest rates than men. 

Women and Health Insurance Benefits

Besides getting several benefits in terms of extra savings and deductions in tax on home purchases and home loans, women can also avail advantages in terms of savings while getting health insurance. When women buy health insurance in India, they get tax benefits on the premiums paid to insurance providers. Under Section 80D of the Income Tax Act of India, women are eligible to claim deductions under certain conditions. 

Additional Read: Investment Ideas for Women

Educational Benefits for Women

In India, the government has been striving to drive women to pursue higher studies and have earning potential that makes them independent in the future. Towards this aim, the government has set up schemes to boost educational loans for girls and women, as well as prompted banks and other financial institutions to offer benefits on loans. Besides this, if a woman has taken an educational loan to finance the education of her dependents like a spouse or children, there are tax deductions on the loan payments. Under Section 80E of the Indian Income Tax Act, women can claim tax deductions on interest repayments. It is possible to claim a deduction on the full interest repayment and there exists no cap on this deduction. 

Additional Read: Save Money While Shopping

Optimising Tax Savings

With a view to gaining financial independence, women should make it a goal to optimise their tax benefits to the fullest. Apart from this, women in India should have their own savings accounts that generate interest. This income is usually treated as “income from other sources” and is eligible for taxation. However, by availing of the benefits listed under Section 80TTA, you can claim a tax deduction of Rs. 10,000 annually on the interest earned from your savings account. It is also a good idea to invest in your girl child and you can easily avail of schemes like the Sukanya Samriddhi Yojana (for girl children below 10 years of age). By investing a sum every year (till the child reaches the age of 21), you can collect a corpus plus earn interest (compounded) on this. The interest has the benefits of tax deductions of Rs. 1.5 lac per year. At the time of maturity, your daughter will have a corpus that can be used for any purpose from education to marriage. 

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only.

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