Financial planning for women; here's how to do it right
A sum of women's salary must go into buying a life insurance policy. They can claim tax benefits against it under section 80(C) of Income Tax Act. There are so many benefits attached with life insurance policies: life cover, investments, savings, child education planning, life stage planning and even retirement planning.
Financial planning is important for everyone, but more so for women as their life expectancy is longer than of men even as they earn less than them due to the gender pay gap at most workplaces. A working woman should start tax planning right when she starts her first job to accumulate enough corpus by the time she retires. In most instances, women take a mid-career break to look after their children. This break means no salary for those many months. This should also be taken into account while planning finances.
Here is how women should plan their taxes:
1) Life insurance: A sum of women's salary must go into buying a life insurance policy. They can claim tax benefits against it under section 80(C) of Income Tax Act. There are so many benefits attached with life insurance policies: life cover, investments, savings, child education planning, life stage planning and even retirement planning.
2) Health insurance: Women must buy a health insurance policy of at least Rs 5-10 lakh coverage to minimise their healthcare expenses . The tax benefit can be claimed under section 80(D) of Income Tax Act.
3) Education loan: Single women willing to pursue higher education should take education loan. The interest paid on education loan is allowed as a deduction from the total income under section 80E. However, the deduction is provided only for interest part of the EMI. The loan can be taken for the education of self, spouse or children.
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4) Home loan: Home loans in India offer tax benefits that can significantly reduce tax outgo. Following deductions can be claimed on Home Loan: Deduction for interest Paid on Housing Loan, Deduction on Principal repayment, Deduction For Stamp Duty and Registration Charges, Deduction for first time Home Buyers and Deduction for Joint Home Loan.
5) Section 80 (C) benefits: Section 80C of the Income Tax Act allows for a deduction of up to Rs 1,50,000 for investing in tax-saving options. These options include Public Provident Fund (PPF), Employee Provident Fund (EPF), Equity-linked Saving Schemes (ELSS), and Life insurance etc. Life insurance, we have already covered. Those who have a girl child under 10 years can benefit from the recently launched Sukanya Samridhi Yojana.