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How can couples save on income tax?

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How can couples save on income tax?

Tax savings represent a major challenge for families these days. However, the tax burden can be split amongst spouses for greater savings. You can make joint plans for investing money and managing the same with your spouse. Here are some of the best tax saving options for couples:

  • Joint Home Loan- This can benefit couples since home loans come with major tax benefits. The interest paid annually is tax deductible up to Rs. 2 lakh under Section 24B for every co-borrower. The principal amount repaid is also eligible for tax deductions up to Rs. 1.5 lakh under Section 80C. This means that couples can save a maximum of Rs. 7 lakhs annually if they have a joint home loan.
  • Joint Insurance Policies- Life Insurance offers good tax savings under Section 80C and both spouses can claim deductions based on the premium that they are paying.
  • HUF- The HUF or Hindu Undivided Family helps in saving taxes as well. An HUF can be formed where there is a dedicated bank account, PAN card number and IT return irrespective of the members of the same. The HUF can claim deductions under several sections including Section 80C. There should be a legal deed for the HUF which will have information about its business and member details. This helps when one is earning rent from properties which are either jointly or self-owned. The tax liability will thus be covered through the HUF. Even under Section 80C, in case investments are made, there will be eligibility for exemptions separately up to Rs. 1.5 lakh. Only the leading male family member can setup the HUF and in case he dies, the senior most female HUF member can take over the headship of the same.
  • Slab-Based Investment Planning- The Government may often provide limited avenues for couples to save on taxes. They can plan out investments in a manner that the total tax liabilities of the household goes down. One spouse can emphasize on creating wealth and increasing savings while the other party can focus on saving taxes.

 

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