Old Tax Regime: Are you in the Old Tax Regime? Don’t worry! Know how you can save up to ₹7 lakh in income tax with the help of your wife. These 3 smart ways of education loan, stock market investment and joint home loan will give a new flight to your financial planning.
Old Tax Regime: Even after the introduction of the new tax regime, many people prefer the old tax regime because it offers the benefit of many types of deductions and exemptions. If you are also in the old tax regime and want to reduce your tax liability further, then your wife can prove to be a great help to you in this. The relationship of husband and wife can support each other not only emotionally but also financially. There are some smart financial moves, which if done together by husband and wife, not only will money be saved, but huge exemption can also be obtained in income tax. Let us know about 3 such solid ways, by which you can save income tax of up to ₹ 7 lakh with the help of your wife.
1. Education loan in the name of wife
Nowadays many married couples agree that their wives should continue their studies or do a professional course. If your wife also wants to study further, then taking an education loan in her name can be a great tax saving strategy.
How to get exemption
You can claim deduction under Section 80E of the Income Tax Act on the entire interest amount paid on the education loan.
For how long
This tax exemption is available for a maximum of 8 years during the loan repayment period.
Points to note
The loan should be taken from a recognized financial institution or charitable institution and it should be for higher education (graduation or post-graduation, or some vocational course). This loan can be taken for the education of husband, wife or children. If the loan is in the name of the wife and you are repaying it, you can still claim this exemption (subject to certain conditions, it is better that the EMI goes from the wife’s account if she has income, or you give her money as a gift which she can use in the EMI).
2. Investing in the stock market from wife’s demat account
Capital gains (LTCG) on long-term investment in the share market are exempted up to ₹1 lakh in a financial year. If your wife’s income is low or she is a housewife and she does not have any significant taxable income, then this method can be icing on the cake for you.
How to do it
You can give some money to your wife as a gift (keep in mind the tax rules on gifts) and open a demat account in her name and invest that money in shares.
Benefit
Your wife will get a separate tax exemption of up to ₹1 lakh on the long-term capital gain from this investment. If you had invested the same money from your account and you were already getting LTCG of ₹1 lakh, then you would have had to pay tax on the additional gain. In this way, the total tax liability of the family is reduced.
3. Joint Home Loan
Buying a house after marriage is every couple’s dream. If you buy a house by taking a joint home loan and get the property registered in both your names, then both of you can claim separate tax benefits. This is a very effective way of tax planning.
Exemption on principal amount
On repayment of the principal amount of the home loan, both of you (husband and wife) can separately claim a deduction of ₹1.5-₹1.5 lakh, i.e. a total of ₹3 lakh under section 80C (provided both are co-owners and co-applicants and are contributing to the EMI).
Exemption on interest
Similarly, both of you can avail tax exemption of Rs 2 lakh each, i.e. Rs 4 lakh in total, under section 24(b) on the interest paid on home loan (in case of self-occupied property).
Total benefit
In this way, if the home loan amount and other conditions are met, both of you can get tax benefit on principal and interest up to Rs 7 lakh (Rs 3 lakh + Rs 4 lakh) together. However, this will depend on the total amount and interest of your home loan.
How to do the right financial planning?
With the right financial planning and information, you can reduce your tax liability to a great extent even while living in the old tax regime. These joint transactions done with your wife will not only help you in achieving your financial goals, but can also give you a lot of tax savings. However, it is always better to consult a certified financial planner or tax advisor before making any financial decision so that you can take the most appropriate step according to your personal situation. By adopting these tax saving hacks, you will be able to manage your hard-earned money in a better way.
FAQs: Frequently Asked Questions
Q. Can the wife avail the benefit of home loan even if she is a housewife?
If she has any income or she is contributing to the EMI, then she can get tax exemption.
Q. Is the exemption on education loan available only to the person who is studying?
No, if you take a loan for your wife and pay the EMI, then you get tax exemption.
Q. How will the gain on investment in shares in the name of the wife be tax free?
The income limit of the wife and the exemption limit of LTCG are different, so the gain up to ₹ 1 lakh will be tax free.
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