There are many ways in which your spouse can support you in saving taxes. Let us take a deeper look at some of them.
1. Joint Home-Loan
A joint house loan is a home loan that is taken by over one individual and paid in the same way. Family members including spouses and parents, siblings and/or descendants may be co-applicants for the home common loan.
If you wish to use a greater loan amount, you can take a home loan in common names. Your odds of acceptance for home loans also become higher than those for individual loans. Another benefit of a joint home loan is the exemptions you get on income tax. The application for a common house loan and tax savings are easier and bigger than in the case of a single name loan.
Benefits of joint home loan
- If your wife, mother, daughter, or sister take a home loan together and their property belongs to them individually or collectively, a lesser property registration cost may be charged by some member states.
- The EMI's reimbursement of the joint loan must consist of the co-candidates' joint account. This facilitates the tracking of contributions and facilitates reimbursement.
- Succession and other legal issues are reduced if the husband and wife jointly own a property.
- A proportionate higher loan amount will be sanctioned in a joint house loan since the bank aggregates the incomes of the applicants concerned. If you choose a combined house loan, banks will be willing to offer you greater loan amounts. It is due to the increased reimbursement capacity as there is more than one individual who can return the loan. The ratio to the increase in the amount of the loan relies upon the revenue and reputation of the organisation in which the co-applicant is engaged.
- Equal payback responsibility, when one applicant is unable to pay the loan amount because of unexpected circumstances, the bank and the customer don’t fear a default, since another borrower, who is equally liable, is also accountable to pay the EMI. The obligation to pay the monthly payments shall be transferred to the other co-applicant.
2. Leave Travel Allowance
Leave Travel Allowance (LTA) is a form of allowance that the employer provides to his employees on leave to cover his travel costs. LTA is a key component of the employee's compensation and is eligible to be exempt from revenue tax in accordance with the 1961 Income Tax Act. The LTA earned by the employee is not part of its net income of the year under Section 10 (5) of the Income Tax Act.
What is the eligibility criteria for LTA?
- Only actual travel costs may be claimed by LTA. The LTA is responsible for all travel modalities, i.e. road, rail or air. However, legitimate proof of the cost of claiming the leave travel allowance must be provided by the employee.
- Only travel expenses can be claimed for LTA. It cannot comprise food or accommodation or any such cost, other than transport.
- It should be emphasised that in each financial year, the employee cannot claim LTA. Only two travel days in a block of 4 years can be claimed for LTA. The government decides on the block years for the LTA reasons. The current LTA claim block covers the 2018–2021 calendar years. 2014/17 was the last running block. The employee shall indicate such time as “leaving,” as LTA may only be claimed if an employee is on leave of work for travelling purposes.
3. Joint Life Insurance
Life plans assist you to secure the goals of your life. In the event of your death, they will protect your family from financial difficulties. Traditionally, a single policyholder has always had the term insurance plans linked with it.
However, due to the increasing market and societal factors, the need to offer comprehensive family protection was brought about by multiple policymakers. Such schemes are known as joint-term insurance schemes. They are particularly popular among married couples. In single insurance, they offer life insurance to a couple .
Two persons are covered by the joint life insurance policy. Both the insured peers pay the premium for the defined term and the payment is made at the death of either of the two. If one of the policyholders dies, the amount guaranteed will be paid to the other policyholder. The policy nevertheless ends on the death of the partner.
If the surviving policyholder wants to use the lifetime coverage further, a new insurance plan ought to be purchased. Both the policyholders and beneficiaries in the joint-life policy are the owners.
4. Joint Health Insurance
A joint health insurance scheme is designed primarily to cover couples. It covers two individuals under a single policy.
The co-service insurance system can be a better solution, especially for young couples, instead of having individual policies for both partners. The requirement for two distinct insurance plans for each partner is eliminated by the joint insurance cover. Since both the partners are insured in the same plan; tracking and payment of premiums become easy.
The value guaranteed in a common plan is based on a range of parameters including the age, health status, income and lifestyle of the main policyholder. Age and medical condition shall be taken into account for the secondary policyholder.
These are some of the ways that can help you with saving your taxes. But note that each has its own set of merits and disadvantages, so it is always suggested to tread carefully. It’s never too late to start with the right things.