Tax Planning for Working Women in India
By Ankit Sharma
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In India, for ages women have allowed other members of her family - like her father, brother or husband, to take important decisions of her life. Even the financial decisions for a woman are taken on behalf of her by her male family members. However, this is changing fast as women are increasingly stepping beyond the boundaries of the house to make an independent career for themselves.

As more and more women are climbing the professional ladder, they are also equipping themselves with the required financial knowledge that will help them to manage their finances on their own. With the correct financial knowledge, it is easy for an average woman to handle her money matters independently.

The first step for being truly financially independent for the fairer sex includes gaining understanding and clarity of the income tax laws that are applicable on their income. This will help them in tax planning and in analyzing the impact of income tax rules and regulations on their finances.

Fundamentals of Income Tax for Women Assessee

Some basic features of Indian taxation system that all women should keep in mind are as follows:

  1. In India, men and women have had separate tax slabs under the taxation system till very recently. The limits of these slabs also kept on changing from year to year depending on the changes brought about in the latest budgets. However, since last year (FY-2012-13), the income tax slabs for both men and women has been unified. 
  2. Taxes are levied on all working woman regardless of whether she is a business woman or she is a salaried individual, what business a woman does or where she is residing.
  3. Income tax is levied on both an individual as well as a company. So, women entrepreneurs who are running firms will have to pay individual income tax and income tax incurred by the company, both.
  4. When calculating the total payable income tax, income earned by a lady from every source in a financial year is taken into account. Incomes from various sources are classified into the following heads:

a) Income from salary - All income earned as salary through the employer-employee structure is put under this head for the purpose of taxation.

b) Income from house property - Any income earned from property like a building or land, which is not utilized in business or for professional purpose is taxed under this head.

c) Income from profession or business - Income incurred from a business enterprise or professional engagement is classified and taxed under this head.

d) Income from capital gains (for money invested in shares, funds etc) - Income earned from the sale or transfer of assets such as real estate, bonds, shares, jewelry, equity, paintings, art etc are taxed under this head.

e) Income from other sources - includes income from dividends, interests on securities like debentures, bonds, government securities, lotteries, horse's races etc.

      5. Although, this is not an exhaustive list, it includes some of the major sources of income for individuals under each head. If any income is eligible for tax relief, it is computed and provided for under its respective head only.

      6. Under section 80C of the Income Tax law, both men and women have been provided many tax reliefs also, such as tax free investments of up to Rs. 100,000.

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