Women just don’t make men spend more, they can also help them save more tax.

This is possible if the women of the family start maintaining separate income tax files.

There are various benefits in place for women taxpayers. To make the most of these, every woman above the age of 18 should have a separate income tax file. By doing so, one can lower the tax outgo for the entire family considerably.

For the current financial year, the tax exemption limit for women is Rs 1,80,000. For a woman senior citizen, the exemption limit is Rs 2,25,000 per annum. Hence, to enjoy the tax advantages, every lady of the house should have an independent income tax file.

Waiver fun

Under section 80C of the income tax act, women are eligible for a deduction of up to Rs 1 lakh per annum on investments in specified instruments such as buying an insurance policy, paying children’s education fee and investing in equity-linked savings schemes.

They also get a waiver of up to Rs 1,50,000 per annum on housing loans taken for buying a residential property. Moreover, the entire income from mutual funds, including dividends, and long-term capital gains earned from selling shares of listed companies are fully exempt from the tax net. All these benefits are available to women taxpayers irrespective of such waivers being enjoyed by their spouses and other family members.

Points to ponder

Let us now consider the important factors that a woman taxpayer needs to keep in mind to get the tax benefits.

There must be adequate funds in her name so that she can generate her own income.

A woman also needs to be cautious while accepting gifts from husband, father-in-law and mother-in-law. In these cases, any income arising out of the gifted money is clubbed with that of the donor, according to section 64 of the Income Tax Act, 1961.

So, to save on taxes, a woman must try to increase her kitty by receiving gifts from relatives other than her husband, father-in-law and mother-in-law.

Women also enjoy separate exemptions under the wealth tax law. However, they are not required to pay and file their wealth tax returns as long as the net taxable wealth does not exceed Rs 15 lakh.

Therefore, under the present law, if a woman’s income is Rs 5,50,000 per year and she was to pay Rs 1 lakh to avail herself of the tax benefits under section 80C and pay another Rs 1,50,000 towards housing loan interest, her tax liability would come to Rs 12,360 only. This is certainly not a very big amount.

Hence, the time has come for all women, whether engaged in any business or doing service, to adopt proper tax planning techniques to reap maximum dividends by paying the minimum tax.

Plan right now

An independent income tax file will result in greater tax savings for the family apart from providing emotional and social security to a woman. Let us now look into the investment options available with a woman to get the tax benefits.

Women taxpayers can buy property jointly with their husbands or any other member of the family. Gold can be another safe haven investment, but buying the yellow metal should be more out of need and less as part of an investment plan.

If the value of the jewellery owned by a woman exceeds Rs 15 lakh, she will have to file wealth tax return. At present, the rate of wealth tax is just 1 per cent.

It is advisable that women declare their gold account in their wealth tax return. One should also regularly value one’s jewellery for wealth tax purpose. Moreover, if one plans to sell one’s old jewellery, the associated capital gains should be kept in mind. Also, buying new jewellery by selling the old ones does not help in saving capital gains.

Though women shouldn’t receive gift from their husbands, they can take interest bearing loans.

It is also advisable that women taxpayers should not resort to the idea of cross gifting.

This happens when a lady receives a gift from her friend’s husband which has been gifted by the latter to the friend. This arrangement should never be adopted as it might result in the clubbing of income.

As the saying goes, you reap what you sow. The zeal to save and plan ahead of time can help women taxpayers ensure a hassle-free present and a safe future.

The author is a tax and investment consultant in New Delhi. He can be contacted at slakhotia@satyam.net.in