7 amazing ways for salaried women to save tax

7 amazing ways for salaried women to save tax

As a salaried woman, you may know the importance of saving taxes. But did you know that there are number of options available to you that can help reduce your tax burden? From claiming deductions to investing in tax-saving instruments, there are many ways to save tax. However, as your income increases, the tax slab that applies to you may also change. In that case, you will be liable to pay income tax at a higher rate. Here are 7 amazing ways for salaried women to save tax.

1. Save while repaying a home loan

Buying a home may be one of the life goals for many. If you avail of a home loan for buying a house, you can claim tax benefits on the principal and the interest component of the borrowing.

Section 80C of the Income Tax Act, 1961, contains provisions for tax benefits on the principal component of your home loan. As per this provision, you can claim up to Rs. 1.5 lakh on principal repayments as a deduction from your total income during a financial year.

As for the deductions on home loan interest repayments, you can check the table below for the deduction limits available as per section 24(b) of the Income Tax Act, 1961.

** The above-mentioned tax benefits on home loan repayments are only available in the old tax regime. If you opt for the new tax regime, only the deductions on home loan interest repayments for the let-out property as per section 24(b) will be applicable.

2. Use your House Rent Allowance (HRA) to save tax

You may find that House Rent Allowance (HRA) is included in their salary. This is an allowance employers offer to employees who live in rental accommodation. If you receive HRA as a part of your salary, and if you are currently residing in a rented house, you can claim the least of the following amounts as a deduction from your income:

• The actual amount of HRA received
• 50% of (basic salary + dearness allowance) if you live in a metro city or 40% of (basic salary + dearness allowance) if you live in a non-metro city
• Actual rent paid minus 10% of your (basic salary + dearness allowance)

3. Invest in the Sukanya Samriddhi Yojana (SSY)

For salaried women having daughter, investing in the Sukanya Samriddhi Yojana (SSY) is an excellent way to save up for the future of their daughters, and reduce their tax burden in the process. If your daughter is below ten years of age, you can open an SSY account and make yearly investments in the child’s name until they attain 21 years of age.

In terms of tax benefits, the Sukanya Samriddhi Yojana (SSY) scheme is an exempt-exempt-exempt (EEE) scheme. This means you get a three-fold tax advantage, as follows:

• The investments made in the scheme are deductible under section 80C up to Rs. 1.5 lakh per financial year
• The compound interest earned on your investments is tax-free
• The withdrawals made from the account at the time of maturity are also tax-free

4. Save taxes while repaying education loan

If you have availed of an education loan for yourself, your spouse, or your children, you can claim tax deductions on the interest component of the loan repayments. Section 80E of the Income Tax Act, 1961, allows you to deduct the entire interest paid on eligible education loans during a financial year. There is no cap on the deduction allowed.

5. Make use of deductions on your savings bank account interest

A savings bank account or a salary account is one of the most fundamental financial products available for all salaried women. Your employer may have opened a salary account in your name with a partner bank, and you may even have your own savings accounts. Over the financial year, you will earn interest on these account balances at the interest rate specified by the banks.

While this interest is taxable as income from other sources, you can use tax benefits under section 80TTA to reduce the tax burden on such income. The maximum savings bank account interest that you can claim as a deduction is capped at Rs. 10,000 per financial year.

6. Donate to tax-saving relief funds and charities

Under section 80G of the Income Tax Act, 1961, donations made to specified relief funds and charities are deductible from your total income. Depending on the recipient, the maximum permissible deduction may be capped at 50% or 100% of the amount donated. So, this is another way for salaried women to save taxes. If you opt for this strategy, remember that the tax benefits are not applicable on cash donations exceeding Rs. 2,000.

7. Invest in health insurance

When you invest in health insurance, you need to pay premiums to the insurance service provider. These premium payments are eligible for tax deductions under section 80D of the Income Tax Act, 1961, subject to the following limits.

The above limits include deductions up to Rs. 5,000 per financial year spent on preventive health checkups.

**The above listed tax benefits are only applicable if you choose the old tax regime. You cannot claim these benefits if you opt for the new tax regime.

The Income Tax Act, 1961 has several beneficial provisions for salaried women to save taxes. If you are also a salaried woman keen on reducing your overall tax burden, you can employ any or all of the above strategies. Remember to choose the correct tax regime though, so you can make the most of the tax benefits you are eligible for.