“Chains do not hold a marriage together. It is threads, hundreds of tiny threads which sew people together through the years.” ~Simone Si...
“Chains do not hold a marriage together. It is threads, hundreds of tiny threads which sew people together through the years.” ~Simone Signoret
One such important thread is money!
Now in the changing times when role of money has become increasingly significant and women in the house being educated are sharing financial burden of the family with men. As we know that marriage is a vehicle with two wheels and both wheels should move in sync for smooth running of the family. This is increasingly becoming clear in respect of money matters as man and woman of the house are bearing equal weight of monetary responsibilities. Considering the present high cost of living, housing and bringing up and educating the children, more and more females are entering the workforce to augment the resources of the family. Though Income Tax Act, used to grant higher exemption limit for women taxpayers earlier, this is no longer available now. However, there are certain tax benefits by way of which a family can have enhanced benefits if the wife is also working.
Let us discuss some of the important provisions here:
As per the provisions of Section 80 C a person can claim deduction in respect of education expenses incurred in any university, college, school or educational institution situated in India for full-time education of his child upto an amount of Rs. 1.50 lakhs per year along with other eligible items like PPF, ULIP and PF etc. However this deduction is available in respect of two children only. So in case there are more than two children, the working wife can claim the education expenses for up to two more children as the restriction of two children is per assessee and not per family. Even in cases where family does not have more than two children but education expenses per year exceed Rs. 1.50 lakhs per year, then these expenses can be bifurcated between husband and wife so as to maintain the limit of Rs. 1.50 lakhs.
As per Section 80 D an assessee can claim deduction upto Rs. 25000 for any amount paid toward medical insurance premium for self and family. However taking into account the actual cost of taking health insurance, the limit of Rs. 25000 is not sufficient enough to cover the whole family. Moreover this limit of Rs. 25,000 includes a deduction of Rs. 5,000 available for preventive health check up, the effective limit available for health insurance is thus only Rs. 20,000 for the persons who are availing the benefit of preventive health check up. So the health insurance premium paid in excess of these limits can not be claimed under Section 80 D in most of the cases where husband is the only tax payer. However in case the wife is also a tax payer, the health insurance policy can be purchased and premium be paid in such a way so as to ensure that both husband and wife are able to claim the fullest benefits of Section 80D.
For home loan repayment:
As per Section 80 C, an assessee can claim deduction on account of many items which are almost mandatory in nature like Life Insurance Premium, Provident Fund and repayment of housing loans Since the property prices have gone up substantially, the principal repayment itself in most of the cases is above Rs. 1.50 lakhs. So effectively most of the home loan borrowers are not able to claim the full benefit of home loan repayment under Section 80c. In such cases if the husband is only one working, the benefit in respect of such overflowing items is lost. However in case wife is also working, the amount of repayment can be claimed by both of them if they are joint owners of the property and co-borrower of the property.
Benefits in respect of house property:
As per the present scheme of the taxation of income from house a person is allowed to have one property for self occupation and thus need not pay any tax on that. However in case one owns and uses more than one property, the owner has to offer for tax notional rent for taxation though he has not received any rent in respect of more than one houses occupied by him. In case wife is also earning the other property can be had in her name and thus between husband and wife two properties can be treated as self -occupied without having to offer any amount of notional rent for taxation.
Benefits of LTA
The Income Tax laws allow the salaried employees to claim the LTA(Leave travel Assistance) two times in a block of four years in respect of travelling expenses incurred for his family so effectively a family can enjoy the tax benefits in respect of journeys undertaken in alternative years. However if the wife is also working, you can as a family enjoy this benefit of tax free LTA four times in a block of four years meaning tax free holidays once in a year.
So from the above discussion it become clear that though presently there are no separate tax benefits available for working women, however a working women can still take benefit of existing provisions of tax laws to minimize overall tax liability of the family as a unit.
(The author is a CA, CS and CFP. He can be reached at jainbalwant at gmail.com and @jainbalwant)