5 Great Ways for You to Save Income Tax After Marriage
One of the first things young couples plan on doing after getting married is to get health insurance together to ensure the health and safety of their family in the future. The Indian income tax laws allow for a tax deduction of a maximum of ₹25,000 per year as per section 80(D) for the payment of the health insurance premiums. The ₹25,000 tax deduction allowed by the government is essentially a deduction of ₹20,000 for the payment of insurance premiums and a sub-limit of ₹5,000 for going through pre-emptive medical checkups.
So, practically if you are not availing the health checkups per year for your family, you will be missing out on ₹5,000 of tax benefits. Given the rising cost of healthcare in India, the ₹25,000 tax deduction for the payment of health insurance premiums for a family is not enough. But, as per the laws, you cannot claim any amount over ₹25,000 under section 80(D) in your tax deductions. This situation is only true in the case, only one of the spouses is a taxpaying member of the family.
In case both the spouses are taxpaying individuals, then they can both avail maximum benefits individually and for the family under section 80(D), which totals to tax deductions of ₹50,000 per year for paying the health insurance premiums of the family. In this situation, the family is better able to afford more coverage for their health insurance and have a safer future for their family.
Once your medical insurance is on the way, you have secured your ability to ensure the safe health and future of your family. The next thing couples want after marriage is to build a home of their own and start their family as they please. Home loans are available for this exact purpose to help couples fulfil their housing dreams without spending all their life’s savings. Getting a home loan has many tax benefits as well, and if you and your partner are both taxpaying individuals, you can attain double the tax benefits if you co-borrow your home loan on a 50:50 basis.
Firstly, under section 80(C) of the Income Tax Act, individuals are allowed a tax deduction of ₹1,50,000 for the repayment of the principal amount of home loans per year. This benefit can be doubled to ₹3,00,000 per year if both partners are taxpayers and co-borrowers of the loan on a 50-50 sharing basis. There are some necessary/crucial things you need to know about these tax deductions.
Section 80(C) of the IT Act allows a maximum tax deduction of ₹1,50,000 per year. This section is dedicated to tax deductions under different provisions such as housing loans, provident funds, and life insurance. If you are taking the entire ₹1,50,000 tax deduction for repaying your housing loans, you will get no benefits when you are paying your insurance premiums or your contribution to your provident fund. So, it is crucial that you know of the limits and balances your payments under the limit to get the most benefits.
There is another greater tax benefit that you can avail of when you get a home loan post-marriage which is provided by Section 24(B) of the IT Act. According to that section, you can get a tax deduction of ₹2,00,000 per year on the interest that you pay on your home loan. This benefit can be doubled when both partners are taxpayers and co-borrowers of the loan on a 50-50 sharing. This brings the total tax benefits on home loans to ₹4,00,000 per year.
Once the housing problem is sorted, couples plan on bringing the next generation to live and start their journey as a family soon. Children’s education is becoming a costly affair with time due to inflation. This is another place where you can save taxes thanks again to Section 80(C) of the IT Act. As mentioned earlier, the maximum deductions you can get under this section is ₹1,50,000, and it can be redeemed in many different ways, so if you and your partner are both taxpayers, you can get the most benefits by doubling the limit of 80(C) to ₹3,00,000.
There are some conditions mentioned for this tax deduction that you should know of; firstly, you can only get this deduction for the education of two children at most per taxpaying individual. If you have more than two children, then it is a good idea to share the educational cost of the other children with your partner to get maximum tax-saving benefits. In case you don’t have over two or even two children and you want to get the maximum benefits, you can bifurcate the educational costs between the two parents to get the maximum claim and help give your child the best education possible. To know more about tax deductions, you can get for your child’s education; you can use a marriage calculator to get a picture of how you can save the most from taxes.
Leave Travel Allowance
If you and your partner are both taxpayers and employed, you can both enjoy four travels each in a block period of four years, totalling to eight travels in four years combined for the two partners. Please note that the limit to the amount that you can save from taxes under LTA is subjected to Income Tax Act of 1961.
This means you can go on vacations and holidays as per your wish, and you can get a tax exemption on your vacation expenditure. It should, however, be noted that LTA is a part of your CTC or Cost to Company, so the amount of LTA you have in your package defines the amount of money you can spend for your travels. Within the LTA, any amount of money you spend is tax-exempt; any amount of money that you do not spend gets added to your taxable salary, which is then taxed as per your income tax slab.
So, for you to get the most tax benefits, you should take vacations and holidays to ensure you have the lowest taxable salary possible. This will help you keep your income tax low for both taxpaying partners in a marriage. So, you and your spouse can use a marriage calculator to calculate the most amount of LTA benefits you can avail in the block period of four years to make your vacation plans ahead of time.
Property & House
If you want to get a property or second home, it might cost you something called a notional rent. This is a situation where if you own a residential property, you have to pay income tax for it, on the presumption of the rent that you could get out of that property, even if you are not renting it currently or have not even planned on renting it. There are a few tricks for you to get over this rule.
Firstly, every individual is allowed to own and inhabit one piece of property and house, having it be completely tax-free for as long as they live. If you as an individual purchase a second housing property, it immediately becomes taxable if it is purchased in your name. To overcome this problem, you have to get the secondary property under the name of your spouse, given that they are also a taxpayer and do not already have a housing property to their name.
Under this exemption, two spouses can share two separate properties, and they can get the maximum tax-free benefits that they can get. So, for you to get the best tax benefits, you can use a marriage calculator before your marriage to get an estimate of the benefits you can avail of post-marriage.