Earlier, most marriages had one partner working and the other one taking care of the household. In current years, we have seen the societal transformation where both partners are working and managing the household needs. When both are helping each other in managing their financial needs, it is a true partnership. This partnership, along with financial benefits, has tax benefits too. Here is how you can save on taxes with the help of your spouse in different financial instruments-
- Purchasing health insurance
If you are opting for the new income tax slab, it is important to know that you cannot claim any deductions or exemptions under it. However, if you are choosing the old tax regime, you can claim deductions and exclusions. Under section 80D of the Income Tax Act, an individual and HUF can claim deductions up to Rs 25,000 against a health insurance premium paid for self and family. It is possible that the limit may prove inadequate while considering the premiums paid for the entire family’s health insurance. Use an income tax calculator to find out the amount of tax you have to pay, and then plan accordingly. If your partner is a taxpayer too, both of you can purchase health insurance in a manner where both can apply for claims and get the fullest advantage of Section 80D of the Income Tax Act.
- Equity investments
Section 112A of the Income Tax Act dictates that an individual gets an underlying exemption of up to one lakh rupees upon long-term capital on the sale of listed equity or equity-based investments. This is valid only if the Security Transaction Tax (STT) is duly paid. This exemption applies to every tax-paying citizen. Here, one can save taxes in the name of both partners to take dual advantage of this exemption. Also, when you and your partner are dealing with taxation, ensure that you both choose the right ITR form from the different types of ITR, to avoid any hassle later.
- Having a joint home loan
There are multiple tax benefits one can avail of if they have bought a house through a home loan. The tax benefits can further be doubled if you and your spouse are jointly buying the house. Under Section 24(b) of the Income Tax Act, a deduction of up to Rs 2 lakh can be claimed on the interest paid on your home loan. If you have availed of a home loan with your spouse, both of you can together avail of a total deduction of Rs 4 lakh, since you would both be individually eligible for Rs 2 lakh. This claim can be made when you and your partner have taken the loan in the ratio of 50:50. Also, you can claim tax deductions on the repayment of the principal amount of your home loan. Here, an individual can claim deductions of up to Rs 1.5 lakh. However, if you and your spouse have co-borrowed the home loan, both of you can individually avail of Rs 1.5 lakh each. This would increase the overall deduction to Rs 3 lakh.
- Consider purchasing a joint life insurance
When you buy joint life insurance, you can avail a tax deduction on the premiums you pay for your spouse’s policy, too. Also, you get to enjoy the additional benefits that a joint life policy has to offer, such as comparatively lower premiums. Joint life policies have low premiums when compared to two separate individual policies. Also, you can avail of higher tax deductions. Even though you both have purchased the policy jointly, you both can claim deductions for the premiums you pay under Section 80C individually. Use an income tax calculator to get an estimate of the tax payable and the deductions you and your spouse can avail of while filing tax returns.
- Children’s education expenses
While the new income tax slab offers no exemptions or deductions, under the old tax regime, you can claim educational expenses of children under Section 80C of the Income Tax Act. It allows you to claim a deduction for the expenses incurred towards education gained in school, university, college, or any other Indian educational institution where your child is trained full-time. The deduction can be claimed up to Rs 1.5 lakh but is limited to only two children. The parent who is paying the fees can file the claim. However, if you have over two children, you and your spouse can pay the fees accordingly so that the tax benefits can be claimed by both. For example, if you have four children, you both pay the fees for two children each and file for their claims separately.