Don’t consider your spouse being your partner in managing household chores only or sharing financial responsibilities. Because your partner can help you with tax saving as well!
Yes, your partner can help you save tax to a great extent. And the benefits get extended when both of you are earning independently as this gives you an opportunity to save higher jointly.
All you need to do is walk through various wealth maximization and tax saving routes, which will help you gain the utmost benefit.
So, here check the best ones!
Considering a Joint Home Loan
If you are planning to purchase a new home and if that home belongs to you as well as your partner, then you must contribute to the loan jointly. Doing this will enhance tax saving.
It is because, in order to get a home loan, it is mandatory to furnish the income tax return. When you and your spouse are both earning members, you must get housing loan on cumulative income. This can help you increase tax benefits in two ways:
- Section 80C
The principal portion of an installment that you pay will offer additional tax benefits under section 80C. The amount of principal repaid up to INR1, 50,000 is deducted from the gross income individually. This implies if you apply for a joint loan you can take a total deduction of INR 3lakhs.
- Section 24B
The amount of interest you pay on the home loan is eligible for deduction up to INR 2, 00,000 as per section 24B of Income Tax Act 1961. When sharing the loan liability jointly you can claim deduction up to INR 2, 00,000 and aggregate your total deduction of interest paid to INR 4 lakhs.
Working Under the HUF Scheme
The Hindu undivided family is a business group, which has a different existence as per Indian tax laws. Any Hindu family members working jointly can form HUF. Independent existence leads to distinguished identity for which an independent PAN, Income Tax Return, and bank account are required in the name of HUF.
As a result, you are entitled to additional 80C 1.5lakhs limit, and extra limits to avail home loan deductions and additional all section 80 limits.
It would be highly beneficial if you are your partner fall under the high tax bracket as it will ensure that tax is charged at lower rates.
Becoming Joint Holders of Life Insurance Policy
The aim of life insurance policy is to secure life of the surviving partner. Taking a joint life insurance policy is an excellent choice in this regard. This will resolve your purpose of taking insurance together and at the same time entitle you to maximum tax savings. Life insurance is an excellent way of tax saving under section 80C. If installments will be paid jointly, you can distribute them in ratio of premiums, estimated upon your respective age.
Making Investments Considering Individual Tax Slab
This point can be better understood by dividing it into three parts:
- Creating Wealth
If you are making an investment in PPF every year then it would be best to make the investment in the name of higher earning member. This way, you can tax benefit of difference in tax rates applicable in individual cases.
- Money Earned is Money Saved
Whether you save money or earn money, both will lead to capital appreciation. If your spouse falls in the higher tax bracket, he will focus more on tax saving instruments to invest in. Or, if you fall under lower taxes it would be intelligent to invest in high yielding tax saving instruments.
- Exhaustion of Tax Saving Investments
If your tax saving limit is met, still it is possible to invest in your wife’s name in instruments that yield tax free return. Though it will not increase your tax saving but will offer you tax free return and amount reinvested will be clubbed for future use for your wife.
Taking Leave Travel Allowance
This gives you another reason to plan trips. The huge expenditures incurred by a family include traveling. As per the rules of LTA you can claim such benefits twice in a period of 4 years. So, if both of you are getting this benefit, then you can plan a free trip once a year.
Availing House Rent Allowance
HRA is obtained by salaried employees and is a noticeable part of the monthly salary. If you live in a rented property, you can share the rent as well as claim HRA accordingly. Or, if you live in your house then one can pay rent to other and get the benefit of provisions to offer lower income for purpose of taxation.
So, now you see, it is very easy to get tax benefits with your spouse. Wait no more and adapt these ways to increase your benefits to the most!