Secure Your Future While Maximising Your Tax Savings. Here’s How
These days, most households have male and female family earning members. Together, they create a massive corpus of funds that can be used for severalincome tax saving schemes. While the tax slab for women remains the same as men in Budget 2020, you can still contribute to various income tax saving schemesand help secure the future of your family.
Income tax saving schemes are incredibly crucial to prevent high-income tax outgo. At the same time, maintaining a clear tax saving plan at the beginning of the year can keep you on track and avoid any unpleasant situations later.
As you are approaching the end of FY2019-20, it is advisable to plan your tax saving investment.
From choosing between the old and new tax regimes to exploiting the income tax slab for women, the trick is to use every instrument available to maximize your savings and to secure your future.
Let us discuss how you can benefit even when the tax slab for women remains unchanged. The tips in this article will tell you how to plan your tax saving investment and expand your disposable income so that it can be invested in other financial products for more significant savings and returns.
Here are some practical tips to maximse your tax savings that you may find helpful.
Choose the tax regime wisely
The good thing about Budget 2020 is that you get to choose between the old tax regime and the new one. If you are planning on using your savings as a tax saving investment, then you should use the old tax regime while filing your income tax as you will be able to benefit from the savings of up to Rs. 1.5L under section 80C of Income Tax Act, 1961.
Do not worry if you cannot benefit from thetax slab for women.You can still explore the additional benefit under Section 87A of Income Tax Act, 1961, that offers a full rebate of Rs. 12,500 if your total income is under Rs. Five lakhs.
Invest in qualified tax investments first
Before you experiment with other income tax saving schemes, it is advisable to pick the eligible investments first. Besides, don’t forget that even though the tax slab for women may be the same as men, you do enjoy more significant savings on investments. Therefore, you can consider investing in life insurance, different types of ULIPs and health insurance schemes to exploit the benefit of increased tax savings.
For instance, as a woman, you can avail up to Rs. 75,000 in exemption on medical treatment of a disabled family member, as per section 80DD of Income Tax Act, 1961. You can also avail up to 100% tax rebate for contribution to charitable causes, as per Income Tax Section 80G.
Don’t forget to claim a rebate on your child’s tuition fee, home loan interest, leave travel allowance, house rent allowance, and more such exemptions and deductions to increase your tax savings. There are many such tax investments that you, as a woman, can explore for increased savings and better take-home income at the end of the financial year.
Simply put, exhaust all the regular income tax saving schemesfirst and reduce your tax liability to increase your disposable income.
Planning a home loan? Take one before March 2020 for additional tax benefits
If you wish to buy your first home, then consider doing so before March 2020. If you purchase your property between 1st April 2019 and 31st March 2020, you become eligible for a tax deduction benefit applicable under Rs. 1.5 lakh under section 80EEA of Income Tax Act, 1961.
Consider taking a home loan and get the additional benefit of Rs 30,000 to Rs. 50,000 under section 24(b) of Income Tax Act, 1961, subject to fulfilment of certain conditions.
Invest in schemes like Sukanya Samriddhi Yojana
While your daughter may be too young to worry about the tax slab for women, but she will be an earning member someday. Therefore, you must invest in her education from today. Invest in Sukanya Samriddhi Yojana, a scheme for girl child under age 10, where you can deposit Rs. 1.5 lakh with a lock-in period of 11 years and a fixed return of 9.2% until she reaches the age of 21. After a certain period, you can withdraw up to 50% of the amount to pay for her higher education. Under this scheme, all the interest accrued, and the maturity amount remains interested free.
Even though the government no longer has a different tax slab for women, they do provide additional benefits to you to save tax. Since you are an earning member of the family, you should use this information to save maximum tax on your income and expand not just your tax investments but also your disposable income.
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