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Tax Saving Guide For Women Salaried Employees

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To empower women, several tax breaks and other incentives are available to salaried women, such as decreased house loan interest rates and stamp duty exemptions. Along with the advantages above, paid women may also qualify for the following life insurance tax benefits:

Savings On Taxes, Especially Related To Salary Income

1. Deduction Under Section 16(a)

According to Section 16(a) of the Income Tax Act of 1961 (hence referred to as “the IT Act”), any employee, including women employees, may deduct up to Rs. 50,000 from their normal wage. It is important to emphasise that female employees may claim such a standard deduction under the proposed new tax system as well as the previous tax system.

2. House Rent Allowance (‘HRA’), Section 10(13A)

Every salaried woman employee who receives HRA and lives in a rental unit may benefit from the exemption, provided they do not own any residential units they use for their habitation.

Of the following, the least:

  • Real HRA Received

(b) 40% of Salary (or 50% if the home is in Mumbai, Calcutta, Delhi, or Madras).

(c) Rent exceeding 10% of gross income

3. Special Allowances 10(14)

Many workers, including women, receive Conveyance Allowances, Daily Allowances, Helper/Assistant Allowances, and Uniform Allowances from their employers. They are eligible to claim an exemption of the lesser of the following amounts:

(a) Compensation received

(b) Actual spending

4. Leave Travel Allowance (LTA), Section 10(5)

Every woman employee who receives LTA is eligible to make a deduction for expenses related to travel within India (for oneself and/or one’s family). Her husband and children would be considered family, as well as her parents, siblings, and anyone else who depends entirely or primarily on her.

Other Typical Opportunities For Tax Savings

1. Section 80C – Sukanya Samridhi Yojana (SSY) Investment

Sukanya Samridhi Yojana, launched by the Indian government under the “Beti Bachao Beti Padhao” campaign, offers a 7.6% interest rate at the moment and is available to a single family for a maximum of two girls, provided the account is created at a post office or commercial bank until she turns ten years old.

Amounts deposited in the scheme may be availed as a deduction from the taxable income up to a maximum of Rs. 1,50,000 under Section 80C of the Income Tax Act, 1961 (referred to as the “IT Act”), and any interest earned on such a scheme would be tax-free.

2. Deduction For Specific Investments And Expenses Under Section 80C:

Every woman employee should take advantage of Section 80C of the IT Act, which offers both expenditure-based and investment-linked deductions. Some investment-linked options under this section include Life Insurance Policy Premiums, Contribution to Equity Linked Savings Scheme (‘ELSS’), PPF, Investments in 5 Years Fixed Deposits, etc.

Additionally, the section permits deductions for costs related to tuition fees paid for children’s education in India, stamp duty/registration fees, principal repayment of housing loans, etc. This section’s total quantum of deductions is Rs. 1,50,000 per Financial Year (FY). The majority of women taxpayers should aim to fully utilise this section to reduce their basic tax liability by up to Rs. 45,000.

3. Section 80CCD(1B) – National Pension Scheme Deduction

A salaried woman can effectively save tax on taxable income up to Rs. 2,00,000 per Financial Year, i.e., 1,50,000 u/s 80C and 50,000 under this section, by contributing to a notified National Pension Scheme and availing the deduction of up to Rs. 50,000 under this section, in addition to the limit of section 80C discussed above.

4. Deduction for Interest on Bank Accounts Under Section 80TTA/80TTB:

Women taxpayers who earn interest on savings accounts maintained with a bank or a post office can avail of a deduction of up to Rs. 10,000 per fiscal year (FY) under section 80TTA of the Income Tax Act. Resident senior women citizens are given an additional benefit under section 80TTB of the IT Act, which increases the maximum deduction limit to Rs. 50,000 per FY and other benefits.

5. ULIPs:

Investing in insurance-cum-investment products like Unit-Linked Insurance Plans (ULIPs), which offer life insurance policy coverage and high returns of 12-15% under favourable market conditions, is another way for salaried women employees to wisely park their money. These plans also offer dual life insurance tax benefits, once at the time of premium payment and the next at maturity, due to the life insurance component under Section 80C.

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