In India, it's a legal mandate for all individuals earning above a certain income level to pay income tax to the government. The income tax system in the country is progressive, indicating that as the income level rises, the payable tax amount also increases correspondingly.
In India, the income tax rules are equally applicable to both genders, with no separation of tax brackets based on gender. Nonetheless, numerous tax reductions and deductions can be advantageous for women, motivating them to put resources into financial products that yield significant tax savings.
Income tax slabs for women
The existing income tax slab for women aligns with that for men in India. Prior to FY 2012-2013, women enjoyed a greater tax exemption limit compared to men. However, from FY 2012-2013 onwards, the income tax slabs for both working men and women have been made identical.
Taxpayer categories based on age
In India, the income tax slab rates for both women and men are set according to their income level and age. Taxpayers are segmented into three categories on the basis of their age:
- Men and women below the age of 60 years.
- Men and women between the ages of 60 and 80 years (categorized as senior citizens).
- Men and women above the age of 80 years (categorized 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% |
Pleas note:
- Surcharge: Applied at varying rates depending on income levels.
- Health and education cess: 4%
- Deductions and exemptions: Available under the old regime but not under the new regime.
- Rebate under Section 87A: Applicable for total income up to Rs. 5 lakh in old regime and up to Rs. 7 lakh in new tax system.
Even with standardized tax slabs, women can obtain considerable advantages from multiple tax rebates and deductions offered under varying sections of the Income Tax Act.
Key deductions for women
- Section 80C deductions: Women can claim deductions up to Rs. 1.5 lakh annually under Section 80C, which 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: Under Section 80C, women are eligible for annual deductions of up to Rs. 1.5 lakh, encompassing allocations in:
- 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 are eligible to claim reductions of up to Rs. 2 lakh on interest paid on home loans. This perk can notably slash taxable income and promote investment in the real estate sector.
- Section 80E deductions: Under Section 80E, the interest payment on education loans for higher studies is completely deductible. This applies for a duration of up to eight years or until the complete payment of the interest, whichever comes first.
- Section 80TTA and 80TTB:
- Section 80TTA: Allows a deduction of up to Rs. 10,000 on interest earned from savings accounts.
- Section 80TTB: For senior citizens, allows a deduction of up to Rs. 50,000 on interest income from savings, fixed, and recurring deposits.
Maximising tax savings
Tax allowances and deductions can encourage women to invest in a variety of financial products that don't just yield returns, but also provide tax advantages. Some suitable financial products encompass:
- National Pension System (NPS): NPS contributions qualify for an extra deduction of up to Rs. 50,000 under Section 80CCD(1B), over the limit of Rs. 1.5 lakhs granted under Section 80C.
- Fixed Deposits (FDs): Fixed deposits that offer tax-saving benefits with a lock-in period of 5 years qualify for deductions under Section 80C.
- Mutual Funds (ELSS funds): They provide tax benefits under Section 80C and have a lock-in period of three years.
- Systematic Investment Plans (SIPs): Investing in mutual funds can enable wealth accumulation over time while offering avenues for tax savings.
- 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.
- Home loans: Availing a home loan can bestow considerable tax advantages. Bajaj Housing Finance offers competitive interest rates, long repayment tenures, and minimal paperwork requirements. Our home loans are designed to accommodate the varied requirements of women taxpayers, presenting an ideal opportunity to invest in real estate whilst enjoying tax benefits.
Though the income tax slabs in India are equitable for both men and women, an array of tax rebates and deductions offers substantial advantages to female taxpayers. Investments in financial instruments like PPF, ELSS, health insurance, and home loans can result in significant tax savings and promote financial stability. Seizing these opportunities allows women to make savvy financial choices and maximise their tax rebates in AY 2024-25.
