Ways to save tax for couples | Fusion - WeRIndia

Ways to save tax for couples

Ways to save tax for couples

Many young couples often focus on ways to reach financial security as quickly as possible.

Having financial security allows couples to settle down and start their family.

When both partners are earning, taxes are often considered a pain as they take away some of that hard earned money.

But when both partners are salaried, there are certain tricks that can be used to reduce tax.

Here are the tricks to reduce tax.

Shifting income

When you have fixed income earning instruments, shift them to the lower income earning spouse. This is because the interest on fixed interest instruments is taxable.

The idea here is simple. The interest money one partner earns is shifted to the other partner who has a lower income.

This makes sure that you don’t cross tax brackets which saves as much 10 percent of income being taxed Create the right balance of income for both partners so you can pay the least amount of tax.

Joint home loan

Taking a joint home loan ensures that both partners can get tax benefits. That’s right! As many already know, the interest on home loans is exempt up to ₹2 lakhs and the principal amount is exempt up to a sum of ₹1.5 lakh under Sec 80C.

When you take a joint home loan, these benefits apply to both partners increasing it by two fold.

Using LTA

LTA gets exemption from Income Tax for only the travel cost. According to the tax rules, this only applies to two journeys in four calendar years.

This means that couples can each claim LTA benefits in alternate years so they have these benefits every year.

Splitting HRA between the couples

Couples who are staying on rent can split the HRA. As a result, both can show that while filing for tax and claim HRA benefits under SEC 80C of the Income Tax Act.

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Image Reference: https://pixabay.com/fr/photos/mains-pi%C3%A8ces-cartes-de-cr%C3%A9dit-paume-4459640/

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