Tax planning mantras for newlyweds
Upstox
3 min read • Updated: February 13, 2024, 8:10 PM
Summary
Tax planning can help newlyweds maintain an ethical stance and comply with their legal obligations efficiently. Planning your year-end tax obligations can optimise investments and maximise savings. By aligning expenses and income, new families can avoid cash flow disruptions and bolster stability.
Marriage is the beginning of a new phase in life—a phase that ushers in compounded joy, excitement and anticipation. Travel adventures, homeownership, and perhaps a new car for the family, such are the aspirations of newlyweds, especially if both, husband and wife, are earning.
A 2021 study conducted by People Research on India’s Consumer Economy reveals that 40% of Indian households have dual or multiple earners, and the numbers are suspected to grow exponentially over the years to come.
In the present-day scenario, where dual-income families are increasingly common, chartering aspirations require teamwork and a collaborative approach to financial planning and tax-saving investments.
Tax-saving investments for newlyweds
Home loans Young couples tend to have high aspirations to be homeowners. Fortunately, home loans are subject to tax benefits under section 80C of the Income Tax Act. Couples can gain a double-tax benefit if both individuals are tax-payers and co-borrow the loan equally.
Under section 80C, borrowers are permitted a tax deduction of up to ₹1,50,000 per year for repayment of home loans. In the case of co-borrowing, couples can anticipate a deduction of up to ₹3,00,000 per year.
Furthermore, as per section 24B of the ITA, homeowners can benefit from a maximum deduction of ₹2,00,000 on home loan interests if the owner resides in the property.
Life insurance Considered a prudent practice in general, by investing in life insurance, couples not only secure their families but can also save on taxes by claiming deductions under section 80C. A point worth mentioning is that the premium of such policies varies depending on the age of the individuals. Consequently, the amount of exemption will also vary.
Medical insurance Medical Insurance should ideally be the first investment newlyweds make together. Under section 80C, an individual or Hindu Undivided Family (HUF) is permitted to claim a maximum deduction of ₹25,000 on insurance premiums for family and self. Furthermore, if both individuals are tax-payers, they can individually avail of benefits as per section 80D, resulting in a cumulative deduction of ₹50,000.
Collective financial planning Detailed financial planning is the bedrock of a financially secure marriage. Including tax-saving investments and a mix of long-term and short-term commitments in your plan can fund a safe and fulfilling future, wanting for nothing.
Effective planning begins by considering individual and shared goals. Pursuing a higher qualification, sending the parents on an international trip, or saving up for a rainy day, collective pursuits require an open line of communication and a defined road map littered with milestones.
Once the goals are in sight, outlining transparent budgets and allocating funds will ensure both partners are equal stakeholders in driving the family forward.
Conclusion Just like all other aspects of running a household, tax planning is a shared responsibility. Sound planning ensures your combined aspirations stay within reach and wealth is created in a sustainable manner. As the present financial year comes to an end, be sure to evaluate all tax-saving investment options.