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Business News/ Money / Personal Finance/  Tax saving guide for women salaried employees in 2023
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Tax saving guide for women salaried employees in 2023

Some of the tax and other incentives which a women salaried employee can avail include reduced interest on home loan, stamp duty concession etc. to empower women.

According to Humanity Welfare Council data, 80% of Indian women lack financial literacy, and approximately 62% of Indian women do not have bank accounts.Premium
According to Humanity Welfare Council data, 80% of Indian women lack financial literacy, and approximately 62% of Indian women do not have bank accounts.

According to Humanity Welfare Council data, 80% of Indian women lack financial literacy, and approximately 62% of Indian women do not have bank accounts. As the world is marking International Women's Day (IWD) today, female participation in financial decision-making and proper tax planning will empower more to their traction in financial well-being. So, let's look at how women taxpayers can develop a proper tax planning strategy in 2023, because the deadline to file an Income Tax Return (ITR) for income earned in fiscal year 2022-23 is July 31.

Dr. Suresh Surana, Founder, RSM India

Some of the tax and other incentives which a women salaried employee can avail include reduced interest on home loan, stamp duty concession etc. to empower women. Besides the aforesaid benefits, some of the tax deductions / reliefs which salaried women may avail are as follows:

Tax Savings specifically pertaining to Salary Income:

1. Section 16(ia) - Standard Deduction

Every employee including women employee may claim a standard salary deduction of upto Rs. 50,000 u/s 16(ia) of the Income Tax Act, 1961 (hereinafter referred to as ‘the IT Act’). It is pertinent to note that such standard deduction may be claimed by the women employee under both the old as well as the proposed new tax regime.

2. 10(13A) - House Rent Allowance (‘HRA’)

Every salaried women employee who is in receipt of HRA and who resides in a rental accommodation may avail the benefit of exemption under this section provided he/she does not own any residential accommodation occupied by him.

Least of the following:

(a) Actual HRA Received

(b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)

(c) Rent paid in excess of 10% of salary

For the purpose of computation of such HRA exemption, Salary would constitute the Basic salary plus Dearness Allowance (if part of retirement benefit) and Turnover based Commission.

3. 10(14) - Special Allowances

Many employees including women employees are in receipt of Conveyance Allowance, Daily Allowance, Helper/Assistant Allowance, Uniform Allowance from their employer against which they may claim exemption of an amount which would be lower of the following:

(a) Allowance received

(b) Actual amount spent

Further, Salaried women who receive certain special allowances such as Children Education Allowance, Children Hostel Expenditure Allowance, etc. can claim an exemption up to Rs. 100 per month (for education) /300 per month (for hostel) per child up to a maximum of 2 children.

4. 10(5) - Leave Travel Allowance (LTA)

Every women employee who is in receipt of LTA can claim deduction in connection with expenditure incurred (for self and family*) towards travelling within India. Family would constitute her husband and children; parents, brothers and sisters who are wholly or mainly dependent on her. The exemption of LTA can be availed for two journeys performed in a block of 4 calendar years i.e. 2022-2025, as per the prescribed conditions.

Other Common Tax Saving Opportunities:

1. Section 80C - Investment in Sukanya Samridhi Yojana (SSY)

Sukanya Samridhi Yojana was initiated by the Indian government under the campaign named “Beti Bachao Beti Padhao" and is currently providing 7.6% interest rate. The benefit of this scheme can be availed by a single family for maximum 2 girls, provided the account is opened at a post office or commercial bank till she attains the age of 10.

A minimum and maximum deposit of Rs. 250 and Rs. 1,50,000 respectively can be made in such scheme in any particular financial year. Amount deposited in the scheme can be claimed as a deduction from the taxable income up to Rs. 1,50,000 u/s 80C of Income Tax Act, 1961 (herein after referred to as ‘IT Act’). Further, any interest earned on such scheme would be tax free.

2. Section 80C – Deduction for certain specified Investments and Expenditures:

Section 80C of the IT Act is one of the most popular deductions which every women employee should avail as it offers investment linked and expenditure based deductions. Some of the investment linked options under this section include Life Insurance Premium, Contribution to PPF, Equity Linked Savings Scheme (‘ELSS’), investments in 5 years fixed deposits, etc.

Further, the section allows deduction for expenditure incurred for Tuition fees paid for children’s education in India, stamp duty / registration charges, principal repayment of housing loan, etc. The total quantum of deduction under this section is upto Rs. 1,50,000 per Financial Year (FY) under this section. Majority of the women taxpayers should aim to avail full benefit under this section which can ultimately reduce their basic tax liability upto Rs. 45,000 (i.e. Rs. 1,50,000*30% - assuming they fall in the 30% tax bracket)

3. Section 80CCD(1B) – Deduction for National Pension Scheme

Women taxpayers who contribute to a notified National Pension Scheme, can avail deduction of upto Rs. 50,000 under this section, which is besides the limit of section 80C discussed above. Thus, a salaried woman can effectively save tax on the taxable income upto Rs. 2,00,000 per Financial Year i.e. 1,50,000 u/s 80C and 50,000 under this section.

4. Section 80TTA/80TTB – Deduction for Interest on Bank Accounts:

Almost every taxpayer including women taxpayers holds a Savings Account in some or the other bank and earns interest on the same. As per section 80TTA, women taxpayers who earn interest on savings account maintained either with a bank or a post office, can claim deduction upto Rs. 10,000 per FY. Further, Section 80TTB of the IT Act provides additional benefit to resident senior women citizens, wherein it enhances the maximum limit of deduction to Rs. 50,000 per FY and also extends the benefit of interest received on time/fixed deposits.

Apart from the aforementioned tax benefits, women may also avail the following benefits:

1. Stamp duty concession

Stamp duty is a tax that the government levies usually on transfer of assets or property wherein such stamp duty rates varies from state to state. Many states offer concession on stamp duty payable for female property buyers. For instance, Maharashtra government offers concession of 1% to women home buyers, subject to fulfillment of certain conditions. Deduction for such stamp duty paid can be claimed u/s 80C of IT Act subject to the threshold of Rs. 1.5 lakhs.

2. Home Loan Benefits

In order to increase women’s involvement in household financial decisions, many banks and NBFCs offer additional benefits to women borrower like preferential interest rates, customized schemes etc. The deduction for same can be claimed by women u/s 24(b) and 80C of IT Act.

Further, the Budget 2023 also proposed a one-time new small savings scheme, Mahila Samman Savings Certificate, which would be made available for a two-year period up to March 2025. This scheme will offer deposit facility upto 2 lakh in the name of women or girls for a tenor of 2 years at fixed interest rate of 7.5 per cent with partial withdrawal option. The intricate details and tax benefits of the said scheme are still awaited from the Government.

Vivek Jain, Head – Investments, Policybazaar.com

Women can maximise their savings manifold if they are acquainted with tax saving benefits that they are entitled to avail.

Guaranteed returns plan: For women who want to play safe and aren’t willing to take investment risks should opt for guaranteed return plans offering high returns ranging between 7- 7.5%. While, those who are ready to tackle moderate risk in their investments can choose capital guarantee plans, which are a combination of guaranteed return plans and ULIPs. Those who choose to invest in guaranteed return plans are entitled to a rebate of up to 1.5 lakh under Section 80C owing to the life insurance component. Additionally, these plans come with a life cover that is 10X the annual premium, making it worthy and tax-free under Section 10(10)D. However, after 31st March, the returns on traditional plans will be subject to taxation if annual premium exceeds 5 lakhs.

ULIPs:

Another option for salaried women employees to park their funds wisely is via investing in insurance-cum-investment products such as Unit-Linked Insurance Plans (ULIPs). With ULIPs, they can fetch high returns ranging between 12-15% under favourable market conditions and enjoy a life insurance cover as well. These plans come with dual tax benefits, one at the time of premium payment and the other at the time of maturity owing to the life insurance component under Section 80C and 10 (10D), respectively.

Wisely navigating through these options can help women choose the right investment options and avail tax saving options as per their needs and financial goals.

S Ravi, Former Chairman of Bombay Stock Exchange (BSE)

As a salaried woman employee, several tax-saving options are available to you in 2023. Here's a guide to help you make the most of them:

1. Invest in a Public Provident Fund (PPF) account – This long-term investment offers tax benefits under Section 80C of the Income Tax Act. Women can also enjoy higher interest rates on their investments in PPF accounts.

2. Opt for a National Pension Scheme (NPS) – Investing in NPS can also help you save tax under Section 80C. Women can also claim an additional deduction of Rs. 50,000 under Section 80CCD (1B).

3. Claim deductions on home loan interest – If you have taken a home loan, you can claim deductions on the interest paid on the loan under Section 24 of the Income Tax Act. Women can also claim an additional deduction of Rs. 1.5 lakh under Section 80EEA.

4. Utilize medical insurance benefits – As a salaried employee, you may have medical insurance provided by your employer. You can also claim deductions on the premium paid for medical insurance under Section 80D.

5. Claim deductions on education loan interest – If you have taken an education loan, you can claim deductions on the interest paid on the loan under Section 80E.

By utilizing these tax-saving options, women salaried employees can significantly reduce their tax liability and increase their savings.

Abhijit Roy, Co-Founder & CEO- GoldenPi Technologies

The country is witnessing the growth of women employment at a rapid speed. Women can be seen now taking up leadership roles, starting their own businesses and at par with men in all aspects of life. In order to empower women, the government of India however provides a variety of perks and reliefs, such as reduced interest rates on house loans, property tax rebates, and stamp duty concessions.

Prior to 2012-13, there were multiple tax slabs for male and female taxpayers. This has now changed with the implementation of equal tax slabs for men and women. Several research studies have shown that women have now started taking total control of their financial decisions and are working towards developing their financial independence. Significant efforts are being put in to understand various modes of savings, tax reliefs and rebates. Here are some of the ways to make the most of the benefits that are available with these tax-savings perks.

- Reduction in tax through HRA (House Rent Allowance) - If you pay house rent, you may be entitled to HRA tax benefits.

- Paying premium for Health Insurance- Under Section 80D, claim up to Rs. 25,000 a premium paid towards health insurance for yourself, spouse, and dependent children.

- Tax-Free Bonds - Women who are looking for long term investment of 10-20 years can confidently opt for Public Sector Organizations bonds where principal and payback are secured. Like other bonds, tax- free bonds do have high returns ranging from 5.25% to 5.30% which is predicted to vary with market conditions.

- Tax-Saving investment - Claim section 80C deduction upto 1.5 lakhs

- Child Education - Claim tax exemptions on child education and medical allowances provided by the employer.

- Mahila Samman Savings- This programme will offer a fixed interest rate of 7.5%, which is significantly higher than most bank FDs and other well-liked small savings schemes. This will be available for a period of two years, from April 2023 to March 2025.

Dr. Kshama Sharma (AVP - Customer Success), Pazcare

In today’s world, women are successfully carving niche for them self in every field. They hustle in between work and home without complaining. Many women enjoy financial independence and make the best life decisions. Tax experts, say that income tax rules are generally gender-neutral.

According to me every salaried woman shall take control of their finances and of taxes. By making right investment choices. By availing of tax exemptions women can minimise their tax liability.

Several lifestyle diseases affecting young adults including Women. Health risks increases as women grow older. Health insurance is must when it comes to health security. Women employees can also avail of tax exemptions on health insurance premiums. Maximum tax limit on health insurance premiums of 25,000 for self/spouse/dependents and parents and 50,000 for senior citizens does not just secure future healthcare costs, it also helps salaried employees in saving taxes under 80D.

Apart from that, Tax rebate can be taken on salary components of House rent allowance, Leave travel allowance, Education loan interest etc. Investing under 80C schemes is the simplest way to save tax. It will not only save you taxes, but it will provide you with a corpus after a certain period.

Women are always known for their saving skills so it’s easier for them to maximize their saving by knowing about the tax benefits they are eligible for. Also, taking control of money matters enhances confidence of an individual.

Shilpa Arora, COO and Co-Founder of Insurance Samadhan

Tax saving can be a daunting task for many women salaried employees, but it doesn't have to be. As a woman in 2023, it's essential to understand your tax-saving options and take advantage of them to maximize your savings and empower your finances. From claiming deductions on investments such as ELSS, PPF, and NPS to utilizing tax exemptions on health insurance premiums and education expenses, there are many ways to save on taxes. By staying informed and making informed financial decisions, you can secure a brighter financial future for yourself and your loved ones. Remember, a little bit of planning and strategizing can go a long way in achieving your financial goals.

Shruti Aggarwal, Cofounder, Stashfin

It fills my heart with pride to see an increase in the number of salaried women in the country. As women are becoming more independent and taking full control of their finances, it has become imperative for them to do their tax planning wisely and maximize their savings. First and the most important thing that women can do to save on taxes is to understand exemptions and deductions available on different kinds of investments and payments. After understanding the rules clearly, women can start investing their savings in a variety of low-cost investment choices like bonds, equity shares, provident funds, pension plans, and mutual fund systematic investment plans (SIPs).

Further, the National Pension Scheme introduced by the government can also help women employees in creating a retirement fund for themselves. While personal loans are generally non-taxable, salaried employees can still use their house and education loans to avail of certain tax benefits.

At Stashfin, we have always tried to break down the stereotypes associated with women and finances. We know that the more financially empowered a woman is, the better a country will progress. Therefore, we want to encourage women across the country to be more confident and take control of their personal finances.

Kuldeep Parashar, Co-Founder, PensionBox

Women for decades have been dependent on men in the family for financial advice and work, but with the advent of technology, this notion is changing rapidly. In today's digital age, everything is easy to use and access, empowering women to take charge of their finances. We believe in 'Khud kar lenge' - the future is all about self-reliance.

Long gone are the days when women had to rely on their husbands or fathers for financial decisions. With technology at our fingertips, we can access all the necessary information and tools to make informed decisions about our finances. My own sister used to ask for help with tax filing and savings, but now she does it herself because everything is so straightforward and user-friendly.

We are committed to helping women achieve financial independence. We strongly recommend NPS and optimising the VPF & EPF as simple and effective ways to save taxes and ensure a secure financial future. 2023 presents a world of opportunity for women salaried employees. As you navigate your professional journey, remember to prioritise your financial wellbeing. By taking control of your finances and building a strong support network of mentors and peers who can guide and inspire you we can create a brighter tomorrow for yourselves and your families. This women’s day let’s embrace the power of technology and 'Khud kar lenge'!

Jhalak Jain, AVP – Investments, FinEdge

Indian tax laws do not discriminate between men and women – hence, a uniform tax system is available to both. Having said that, there are a few things that salaried women can specifically keep in mind if they opt for the old regime instead of the new one.

First, don’t let your natural risk aversion steer you towards traditional tax savings avenues such as Tax Saving FDs, PF, NSC or Life Insurance. It would be a lot wiser to channelize your tax saving investment into an ELSS (Equity Linked Savings Scheme) that is more volatile but can help you create wealth for your long-term goals. Instead of succumbing to the yearend rush, start a SIP at the start if the financial year as that would help you benefit from rupee cost averaging. Speak to a qualified advisor, align the investment to a goal, and understand the risk and reward associated with ELSS funds before you invest.

In addition to your ELSS investment, you could also consider investing an additional Rs. 50,000 a year into NPS to take advantage of Section 80CCD(1b), but make sure that you max out the equity component to the ceiling limit of 75%! NPS is a long range investment, and choosing to remain predominantly in the C or D options will not do justice to your time horizon.

A few things to keep in mind on insurance, which has traditionally been a popular tax saving investment: First, do not take up a life insurance policy if you don’t have financial dependents! It’s a waste of your hard-earned money as you don’t need the risk cover and there are far better investment avenues available. Second, do take up health insurance in case your family isn’t already covered outside of a corporate mediclaim. Your contributions will be deductible under Section 80D, and you’ll ensure that your family’s financial plan doesn’t get derailed in case of an unfortunate medical emergency.

Aftab Chaz, Associate Director and Business Head at Elephant.in

In India, the percentage of salaried/ working is rising across all industries, and the tax slabs are now gender neutral. Any woman who earns a salary is responsible for managing her finances and paying taxes. It is thus crucial to be aware of the exemptions and deductions that apply to specific investments and payments. Every financial year, working women look for newer options for tax savings. From investing in PPF to ELSS mutual fund schemes, to name a few, there are multiple tax-saving options available for women today. However, there is one significant tax-saving instrument that women often overlook, and that is insurance.

Health Insurance is one such tax saving tool which not only helps women meet the unprecedented medical expenses, but also acts as a good tax saving tool. Under Section 80D, one can avail an income tax deduction, against healthcare related expenses and the payment of health insurance premiums. The amount of tax deductions available under Section 80D is determined by the number and age of the people covered under health insurance. The taxpayer can save up to 25,000, 50,000, 75,000, or 1 lakh, depending on the covered individuals. Section 80D also covers payments made for preventive health check-ups, critical illness, and other health-related riders provided under a life insurance policy. Tax deductions can be availed for both types of health insurance policies: defined benefit, where a fixed amount is paid as a claim, and indemnity, where the claim is paid based on the medical expenses subject to the overall sum insured.

Other than that, there are other tax saving options for salaried women too, where they can save their taxes under Section 80 C. Tools like- Public Provident Fund (PPF), Guaranteed Return Investment Plans, Equity Linked Saving Scheme (ELSS), Employee Provident Fund (EPF), Tax-Saving Fixed Deposits (FDs), National Saving Certificate (NSC), Sukanya Samriddhi Yojana (SSY), Unit Linked Insurance Plan (ULIP) also some great tax saving options.

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ABOUT THE AUTHOR
Vipul Das
Vipul Das is a Digital Business Content Producer at Livemint. He previously worked for Goodreturns.in (OneIndia News) and has over 5 years of expertise in the finance and business sector. Stocks, mutual funds, personal finance, tax, and banking are among his specialties, and he is a professional in industry research and business reporting. He received his bachelor's degree from Dr. CV Raman University and also have completed Diploma in Journalism and Mass Communication (DJMC).
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Published: 08 Mar 2023, 05:38 PM IST
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