4 tips on how working couples can save income tax

The provisions of deduction of tax at source apply to both but in some cases it is possible to save tax through proper tax planning. Let's see how...

1. Take advantage of different tax slabs

In the case of a working couple, the initial personal exemption limit enjoyed by a male is Rs 1,60,000 whereas it is Rs 1,90,000 in the case of a female. Thereafter, the personal income tax rates are the same for both.

2. House ownership and HRA

Sometimes, the spouses have a possibility of saving income tax on house rent allowance within the family, particularly where one of them owns a house. Different income tax saving would be possible in different cases.

3. Plan your drawings

As far as possible, drawings should be made by the spouse having the higher income so that the taxable income from investments made by him attracts less tax than by the person having a lower income.

4. Save tax through trusts

If a working couple has children, say, one son and one daughter, each one can form a trust for the would-be spouse of one child separately in such a manner that the initial exemption of Rs 160,000 under the provisions of Section 164 of the Income Tax Act is available.

This is how working couples can save a fair amount of income tax through proper planning.

Source : Rediff buisness