Tips to Save Income Tax After Marriage
Now, let’s explore 11 savvy ways you can save on income tax after tying the knot!
Medical Insurance
The first and foremost task a couple plans for after getting married is the family's health and safety. As per Section 80D, a person and HUF can claim a deduction of Rs 25,000 for health insurance premiums for themselves and their family.
25,000 tax deduction is a deduction of 20,000 for insurance premiums and a sub-limit of 5,000 for going through precautionary medical checkups. So if you miss out on availing of the health checkups per year, you will miss out on the sub-limit. This is the maximum limit to claim the deductions as per Indian Income Tax Law.
A higher deduction can be claimed by paying the premium of your spouse’s health insurance policy and clubbing it into your expenses. A deduction that can be claimed on the premium you pay for yourself and your spouse is up to a limit of Rs 25,000. If the spouses are tax-paying individuals, they can both avail of maximum benefits individually under section 80(D), which totals tax deductions of Rs.50, 000 per year for paying the family's health insurance premiums.
For instance,
Premium on your Health Insurance – Rs 13,000
Premium on your spouse’s Health Insurance – Rs 11,000
The total deduction you can avail of – Rs 25,000
Taxable income – Rs 4,00,000
Deduction under Section 80D – Rs 24,000
Taxable income – Rs 3,76,000
By paying for your spouse’s Health Insurance, you can reduce your taxable income by Rs 10,000.
Home Loans
After marriage, the next thing young couples plan is to build a new home. Home loan has many tax benefits under Section 80C of the Income Tax Act. If you and your partner are both tax-paying individuals, you can attain double the tax benefits if you co-borrow your home loan on a 50:50 basis. As per Section 80C, the individuals are allowed a deduction of Rs. 1,50,000 for the home loan repayment per year. In the case of a married couple where both are taxable individuals and co-borrowers of the loan, this benefit can be doubled to Rs. 3,00,000 per year.
Additionally, as per Section 24(B), you can get Rs. 2,00,000 per year on the interest you pay on your home loan. Simultaneously this benefit can be doubled when both partners are taxpayers and co-borrowers of the loan on a 50-50 sharing.
Separate Investments
Buy separate health insurance policies! Each of you can claim up to ₹25,000 for your own policy and an additional ₹50,000 for parents if they’re senior citizens. That’s significant savings.
Life Insurance Policy
Under a life insurance policy, both husband and wife can individually claim deductions under Section 80C. However, in such policies, the premium depends on the ages of the husband and wife. Thus the exemption claim also depends on the same.
Tax File through Gift/Loan
If the husband gifts Rs. 10 lakhs as a gift to his partner and the wife invests this amount somewhere, generating Rs. 1 lakh per year. In these scenarios,
(1) As per the clubbing provision, this 1 lakh of the amount generated from the gift given by the husband will be clubbed back into the husband's income and taxed accordingly.
(2) If the wife further invests this Rs. 1 lakh in some other asset and earns Rs. 30000, then this 30,000 will not be clubbed back in the husband's income; this will be taxed separately as an investment made by the wife.
It is advisable to choose an asset like PPF etc., which is tax-free.
Proper investment planning
Proper investment planning can help such that the overall tax liability of the household decreases. By planning, couples can compound significantly and save more taxes. For instance, if one of the couples is under the bracket of 30% tax, they can make higher tax investments while the other can focus more on tax saving instruments. In addition, adding one more person to the family will help you generate tax-free income.
HRA Benefits
If you both are earning well, you can use the different components of the salary to avail yourself of additional tax benefits. House Rent Allowance (HRA), Leave Travel Allowance (LTA), and Medical reimbursement are some of these components.
For instance, if the husband and wife are staying in rented accommodation, then the minimum of the following will be tax-exempt on HRA:
- Actual HRA amount received
- 50% (metro city) or 40% (non-metro city) of the basic salary
- Total annual rent paid - 10% of salary.
- Joint Ownership of Property
- Co-owning rental property allows you to split the rental income, which could lower the overall tax you both pay. Every little bit helps.
- Utilize Tax Slabs
- Be smart about your income-generating assets. If one spouse is in a lower tax bracket, transferring some interest income can reduce your overall tax burden.
- Children’s Education Expenses
- Claim up to ₹1.5 lakh for your children’s education under Section 80C, and since both parents can claim this, that’s a combined benefit of ₹3 lakh.
Leave Travel Allowance
If you and your partner are both taxpayers, then you can enjoy four travels each in a block period of four years, totaling eight travels in four years combined for the two partners. On this vacation, the expenditure done is tax-exempt. Though it all depends on the employer, as LTA is part of your CTC, the amount of LTA you have in your package defines the amount of money you can spend on your travels.
Within this amount, whatever you spend is tax-exempt, while whatever you haven’t spent gets added to your taxable salary, which is then taxed as per your income tax slab. Hence it is advisable to take holidays and go on vacations to keep your income tax low for both tax-paying partners in a marriage.
Remember, it’s not just about saving money—it’s about managing your finances as a team. Contact Tax2win tax expert to manage your finances well.
Trusted by 1 Million+ Users
4.9 Star User Rating
2500 Cr. Taxes Saved Already
