International Womens Day: How women can claim deduction, slash income tax

Women lead the world in every aspect, be it in politics, science, entrepreneurship, defence, education and any other sphere.  Given the important role they play in the growth of a nation, they deserve special incentives. Recently, while announcing Budget proposals for year 2018, the Finance Minister announced that to incentivize employment of more women in the formal sector and to enable higher take-home wages, amendments in the Employees Provident Fund (EPF) and Miscellaneous Provisions Act, 1952 will be made to reduce women employees' contribution to 8% for first three years of their employment against existing rate of 12% or 10% with no change in employers' contribution. 

Though this recent amendment is likely to improve the take-home salary  of women workforce, on International Women's Day we provide here a few of the tax planning avenues which can be explored by women professionals to minimize the income tax implications:

Deduction for expenses

Most of the things you buy for work can be claimed as tax deductible.  If you use your mobile/ phone or computer, car for your work, you are eligible to claim a deduction of expenses incurred for your business.  In addition, you can claim depreciation break on the capital cost of equipment.

The beneficial rate of interest on loans

Most of the banks offer beneficial interest on loans to women entrepreneurs under Mudra Yojna Scheme for women. Interest paid on such loan is fully tax deductible. 

Similarly, some banks offer special discounted interest rates to women taking housing loan.  Interest paid on housing loan is allowable as deduction while computing taxable income. 

Special insurance schemes

Section 80C also allows you to get tax benefits by investing in life insurance plans. These can be either traditional life insurance or unit-linked insurance plans (ULIPs). Most of the insurance companies these days come up with special plans for women providing beneficial premium rates.  Traditionally, women pay less premium than men for the same sum insured when it comes to buying a life insurance policy. 

Special investment scheme for girl child

If you have a girl child under 10 years, you can benefit from the recently launched Sukanya Samridhi Yojna. You can deposit up to Rs. 1,50,000 each year under this scheme and get a fixed return of 9.2%. Both the interest and maturity amounts under this scheme are tax-free. 

By Shilpi Agarwal – Partner TASS Advisors LLP