In India, every individual who earns an income above a specified threshold is required by law to pay income tax to the government. The country's income tax system is progressive, meaning that as one's income increases, the amount of tax payable also rises.
In India, income tax regulations apply uniformly to men and women, with no distinction in tax slabs based on gender. However, various tax rebates and deductions can benefit women, encouraging them to invest in financial products that offer tax savings.
Income tax slabs for women vs. men
The current income tax slab for women is the same as for men in India. Prior to FY 2012-2013, women had a higher tax exemption than men. But, from FY 2012-2013 onwards, the income tax slabs for both working men and women have been uniform.
The income tax slab rates for both women and men in India are determined by their income level and age. Taxpayers are classified into three different categories based on age:
- Men and women below the age of 60 years.
- Men and women between the ages of 60 and 80 years (categorised as senior citizens).
- Men and women above the age of 80 years (categorised as super senior citizens).
Income tax slabs under new tax regime
| Income Tax Slabs (Rs) | Income |
| Up to Rs. 3,00,000 | Nil |
| Rs. 3,00,001 to Rs. 6,00,000 | 5% |
| Rs. 6,00,001 to Rs. 9,00,000 | 10% |
| Rs. 9,00,001 to Rs. 12,00,000 | 15% |
| Rs. 12,00,001 to Rs. 15,00,000 | 20% |
| Above Rs. 15,00,00 | 30% |
Income tax slabs under old tax regime
| Range of Income | Tax Rate |
| Up to Rs. 2,50,000 | Nil |
| Rs. 2,50,001 to Rs. 5,00,000 | 5% |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
Note:
- Surcharge: Applied at varying rates depending on income levels.
- Health and education cess: 4%
- Rebate under Section 87A: Available for total income up to Rs. 5 lakh under the old regime and up to Rs. 7 lakh under the new tax regime.
- Deductions and exemptions: Offered under the OLD regime but not available under the new regime.
- Despite uniform tax slabs, women can benefit significantly from various tax rebates and deductions available under different sections of the Income Tax Act.
Tax rebate for women: Key deductions
- Section 80C deductions: Women can claim deductions up to Rs. 1.5 lakh annually under Section 80C. This section includes investments in:
- Public Provident Fund (PPF)
- Employee Provident Fund (EPF)
- National Savings Certificates (NSC)
- Equity-Linked Savings Schemes (ELSS)
- Life insurance premiums
- Section 80D deductions: Health insurance premiums paid for self, spouse, and children are deductible under Section 80D. Women can claim:
- Up to Rs. 25,000 for health insurance premiums for self and family
- An additional Rs. 25,000 for insurance of parents under the age of 60
- If parents are senior citizens, the deduction increases to Rs. 50,000
- Home loan interest deductions (Section 24): Women can claim deductions up to Rs. 2 lakh on the interest paid on home loans. This benefit can significantly reduce taxable income and encourage investment in real estate.
- Section 80E deductions: Interest paid on education loans for higher studies is fully deductible under Section 80E, applicable for up to eight years or until the interest is fully paid, whichever is earlier.
- Section 80TTA and 80TTB:
- Section 80TTA allows a deduction of up to Rs. 10,000 on interest earned from savings accounts.
- For senior citizens, Section 80TTB permits a deduction of up to Rs. 50,000 on interest income from savings, fixed, and recurring deposits.
Encouraging investments through tax benefits
Tax rebates and deductions serve as incentives for women to invest in various financial products that not only provide returns but also offer tax benefits. Some relevant financial products include:
- Sukanya Samriddhi Yojana (SSY): This government-backed savings scheme for girl children offers an attractive interest rate and tax benefits under Section 80C.
- National Pension System (NPS): NPS contributions are eligible for an additional deduction of up to Rs. 50,000 under Section 80CCD(1B), over and above the Rs. 1.5 lakh limit under Section 80C.
- Fixed Deposits (FDs): Tax-saving fixed deposits with a 5-year lock-in period are eligible for deductions under Section 80C.
- Mutual Funds:
- ELSS funds offer tax benefits under Section 80C and have a lock-in period of three years.
- Systematic Investment Plans (SIPs) in mutual funds can help build wealth over time while providing tax-saving opportunities.
- Insurance products:
- Life insurance policies, including term plans and unit-linked insurance plans (ULIPs), are eligible for deductions under Section 80C.
- Health insurance policies provide deductions under Section 80D, making them essential for financial planning.
- While the income tax slabs in India are uniform for men and women, various tax rebates and deductions provide significant benefits to female taxpayers. Investing in financial products such as PPF, ELSS, health insurance, and home loans can lead to substantial tax savings and encourage financial security. Leveraging these opportunities enables women to make informed financial decisions and maximise their tax rebates in 2024.
