In addition to being your partner for life, one's spouse can also help you in saving income tax . There are certain tax benefits by way of which you can enhance your tax savings through your spouse. Let us discuss some of important provisions:
Expenses incurred for children
As per income tax laws, you can claim deduction for education expenses incurred in any university, college, school or educational institution in India in respect of full-time education of two of your children, up to an amount of Rs 1.50 lakh, in a year, along with other eligible items like Public Provident Fund, life insurance premium, ULIP and Provident Fund, etc, under Section 80 C. Since this allowance is available in respect of two children, if there are more than two children the other spouse can claim the expenses for the additional children. The limit of two children is qua an individual tax payer and not qua a family. Even in case you do not have more than two children, but if the annual expenses on education exceed Rs 1.5 lakh in a year, these expenses can be bifurcated between two parents a to maximise the claim amount as a family.
Medical insurance
Section 80D allows an individual and Hindu Undivided Family (HUF) to claim deduction up to Rs 25,000 for medical insurance premium for self and family. As health costs have increased, health insurance premiums too have gone up. Today, even the limit of Rs 25,000 is not sufficient for the whole family. Moreover this limit of Rs 25,000 includes a sub-limit of Rs 5,000 for preventive health check-up, the effective limit available for health insurance premium comes to Rs 20,000, in case you are availing the tax benefit of preventive health check-up. Health insurance premium paid in excess of these limits can not be claimed under Section 80 D in cases where only one spouse is working. However, in case both husband and wife are working, the health insurance can be bought in such a way so as to ensure that both spouses are able to claim the full benefits of Section 80D, while ensuring that the entire family has adequate health insurance cover.
For home loan
Section 80 C of the I-T Act allows an individual and an HUF to claim deduction on certain items such as life insurance premium, Provident Fund and repayment of housing loans. With increased property prices and consequent enhanced home loans, the amount of principal repayment itself exceeds the maximum limit of Rs 1.50 lakh in most cases.
Effectively, most home loan borrowers are not able to claim the full benefit of home loan repayment under Section 80C. In such cases if only one spouse is working, the benefit in respect of such overflowing items gets lost. However, in case the other spouse is also working, the home loan repayment can be claimed by both of them, if they are joint owners and co-borrowers. With restriction on set-off of losses, under the head "Income from house property" against other incomes, only up to Rs 2 lakh, it makes sense for both the spouses to become joint owners and co-borrowers to become eligible to claim this benefit.
Benefits in respect of house property
As per the present scheme of taxation of income from house, a person is allowed to have one property for self-occupation. There is no tax payable on the property for self-occupation. However, in case one owns and uses more than one property, the owner has to offer notional rent in respect of such additional property for taxation, though he has not received any rent. In case other spouse is also earning, the additional property can be had in his/her name and, thus, between husband and wife two properties can be owned and treated as self-occupied. This will ensure there is no need to offer any amount of notional rent for taxation.
Though, a married couple does not enjoy any separate tax benefits, they can still take benefit of existing tax laws to minimise the overall tax liability of the family as a unit.
The author is tax and investment expert
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