In India, financial independence and security for women have gained significant momentum over the years. With increasing awareness, government initiatives, and tailored tax benefits, women are empowered to take control of their financial futures. They are making autonomous decisions regarding investments, tax planning, property ownership, and entrepreneurship.
On International Women’s Day, it is essential to highlight various tax benefits and incentives available to women. These measures are designed to support their financial well-being, encourage savings, promote home ownership, foster business growth, and ensure adequate healthcare planning. Understanding these benefits can help women optimize their financial planning and maximize tax savings.
1. Higher Tax Exemption Limits on Income
While there was a time when women enjoyed a higher basic exemption limit compared to men, currently, the income tax slabs are uniform. However, women can still take advantage of various tax-saving instruments such as:
Section 80C Deductions: Women can claim up to ₹1.5 lakh under Section 80C for investments in Provident Fund (PF), Public Provident Fund (PPF), National Savings Certificate (NSC), Life Insurance Premiums, and Equity-Linked Savings Schemes (ELSS).
Section 80D Deductions: Women can avail tax deductions for medical insurance premiums paid for themselves, their spouse, children, or dependent parents. The limit is ₹25,000 for self, spouse, and children and ₹50,000 for senior citizen parents.
Section 80E Deductions: Interest paid on education loans for higher studies is fully deductible under Section 80E. This benefit applies to loans taken for oneself, spouse, or children.
2. Benefits for Women Entrepreneurs
Women entrepreneurs play a crucial role in India’s economic development, and several financial incentives are available to encourage their participation:
MUDRA Loan Scheme: Under the Pradhan Mantri Mudra Yojana (PMMY), women can avail loans of up to ₹10 lakh for small businesses without collateral. These loans are categorized under Shishu (up to ₹50,000), Kishore (₹50,000 to ₹5 lakh), and Tarun (₹5 lakh to ₹10 lakh).
Women-Specific Business Loans: Many financial institutions offer lower interest rates and special loan schemes for women-led businesses. Schemes like Annapurna Scheme and Stree Shakti Package support women in setting up their businesses.
Tax Deductions on Business Expenses: Women running businesses can claim tax deductions on expenses such as rent, utilities, and salaries under Section 37(1) of the Income Tax Act.
3. Tax Benefits on Home Ownership
Owning property is an important financial asset, and women in India enjoy several tax benefits when purchasing homes:
Lower Stamp Duty Rates: Many states, including Delhi, Haryana, and Rajasthan, offer a 1-2% reduction in stamp duty for women home buyers, reducing the overall property acquisition cost.
Home Loan Interest Deduction (Section 80EEA): Women first-time homebuyers can claim an additional ₹1.5 lakh deduction under Section 80EEA on home loan interest payments, apart from the existing ₹2 lakh deduction under Section 24(b).
Joint Home Loans with Spouses: Women co-borrowers in a home loan can claim tax deductions separately, maximizing tax benefits for the household.
4. Savings and Investment Benefits
Women can take advantage of various government-backed savings schemes for long-term financial security:
Sukanya Samriddhi Yojana (SSY): This scheme is designed for the girl child and offers an attractive interest rate and tax-free maturity benefits. Contributions up to ₹1.5 lakh per year qualify for deductions under Section 80C.
Public Provident Fund (PPF): Women can invest in PPF, which offers a tax-free return and serves as an excellent long-term savings instrument.
Employee Provident Fund (EPF): Women employees can contribute to EPF, where both contributions and interest earned are tax-free.
5. Maternity and Healthcare Benefits
Women can claim tax benefits and incentives related to maternity expenses and healthcare:
Maternity Leave Tax-Free Income: Women employees are entitled to 26 weeks of paid maternity leave, which is tax-free.
Medical Allowance and Reimbursement: Employers providing medical allowances can offer up to ₹15,000 per year tax-free for reimbursement of medical bills.
Health Insurance Deductions: Women can claim deductions under Section 80D for health insurance premiums covering themselves and their families.
6. Special Provisions for Senior Women
Senior citizen women (aged 60 and above) enjoy additional financial benefits, including:
Higher Exemption Limit: Senior women have an increased income tax exemption limit of ₹3 lakh compared to ₹2.5 lakh for younger taxpayers.
Senior Citizens Savings Scheme (SCSS): This scheme offers higher interest rates and tax benefits under Section 80C.
Tax-Free Fixed Deposits: Many banks offer higher interest rates to senior women, ensuring financial stability in retirement.
7. Additional Tax-Saving Strategies for Women
Women can maximize tax savings by leveraging additional strategies:
Income Splitting with Spouse: Women can invest in tax-free bonds or gift money to their spouses for tax-efficient financial planning.
Investing in Tax-Free Instruments: Instruments like RBI Bonds, Sovereign Gold Bonds (SGBs), and ULIPs provide tax-free earnings under Section 10(10D).
Capital Gains Exemptions: Women selling properties can reinvest in specified bonds or residential properties to avoid capital gains tax under Section 54 and 54EC.