For the most part, income tax in India is gender-neutral. Tax on women’s income in India is equal to that of men’s income. However, there are certain tax deductions that women can avail to increase their income.
- Sukanya Samriddhi Yojana (SSY):
Sukanya Samriddhi Yojana (SSY) launched as a part of the government's 'Beti Bachao Beti Padhao' campaign. 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 Rs. 1,50,000 and earn a fixed return of 7.6% (interest rate for the quarter ending 31st March, 2022) till the completion of 21 years from the date of opening of account. The maturity amount is tax-free. The interest that accrues against this account which gets compounded annually is also exempt from tax under Section 10 of the Income Tax Act.
- 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, and RGESS etc.
- Health Insurance:
Under the Income Tax Act, an individual who has taken health insurance can claim deductions of maximum Rs.25,000/year (for senior citizen women limit is Rs. 50000/year) for payment of insurance premium. This payment can be for herself, her spouse, her children. She can also claim deductions for her parents in the following amount:
- If parents are not senior citizen the deductions can be claimed upto Rs. 25000/year.
- If parents are senior citizen then the deductions can be claimed upto Rs. 50000/year.
- Savings Account:
Deductions of up to Rs.10,000 are allowed on interest earned on a savings account under section 80 TTA. There are special account facilities available for women in several banks, which offer perks like zero balance accounts. There are several bank savings accounts for women in which they can avail different benefits:
- ICICI Bank's Advantage Woman Savings Account.
- Axis Women Savings Account.
- Kotak Silk Savings Account.
- HDFC Women's Saving Account.
- IDBI Bank SuperShakti Account.
- 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.
Similarly, self-employed individual women are not considered for HRA exemption under this section but can claim tax benefits for HRA under section 80GG of Income Tax Act.
- Educational Loan:
Some of the Education Loan Schemes that are offered by banks in India for women are as follows:
Central Bank of India Cent Vidyarthi: This education loan is a term loan that offers a maximum of Rs.10 lakhs for pursuing an education in India and a maximum of Rs.20 lakhs for pursuing an education abroad.
Corp Vidya Scheme - The Corporation Bank of India offers this education term loan. Female borrowers benefit from lower interest rates on this loan. For new loans, the concession is 50 basis points (25 basis points for women borrowers) lower than the card rate.
Indian Overseas Bank Education Loan - Vidya Jyoti - All female students are eligible for a 0.5 percent interest rate reduction on this education loan. It provides a maximum of Rs.30 lakhs for courses taken in India and Rs.40 lakhs for courses taken overseas. Students can return the interest on this loan during their studies or pay it simultaneously with the principal.
State Bank of India Education Loan - Women who want to pursue higher education overseas can get a loan from the State Bank of India.
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.
These loan scheme keeps changing along with the time and as per the directions of Government. Please reach out to your nearest bank to know about the current ongoing schemes.
- Home Loan:
Tax benefits can be claimed on interest payments for home loans under the Income Tax Act. In case the house is occupied by the taxpayer, then deductions of up to Rs.2,00,000 are possible under specific conditions. Additional deduction of Rs. 1,50,000 under Section 80EEA can also be claimed for first-time buyers under certain conditions subject to the conditions as specified therein.
Although the tax on women’s income in India is the same as that of men’s, the key is awareness of tax-saving tricks. Once a woman knows how and where to save tax, her purchasing power will increase and help her become more independent.
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