Women form 48% of India’s population but haven’t received their share of economic progress in India. Less than one-third of Indian women who are 15 years or older are working or actively seeking work. In this situation, it becomes even more necessary for working women to be financially aware and increase their financial strength.
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)
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 ₹1,50,000 and earn a fixed return of 8.5% until the child is 21 years old. Both the interest and maturity amount are tax-free.
Deductions on other investments
Under Section 80C of the Income Tax Act, deductions of up to ₹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.
Under the Income Tax Act, an individual who has taken health insurance can claim deductions of maximum ₹25,000/year for payment of insurance premium. This payment can be for herself, her spouse, her children, and her parent.
Deductions of up to ₹10,000 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.
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.
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.
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 ₹2,00,000 are possible under specific conditions. Deduction of ₹50,000 can also be possible for first-time buyers under certain conditions.
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.