There's an adage that money can not buy love, but it certainly plays a significant role in securing a couple’s future. Money isn't the thing people look for when it comes to love, but it is the other way around, as couples can save some on taxes. According to experts, one area that is often overlooked in relationships is tax planning. Many couples fail to realise how much they can save on taxes by aligning their financial and tax strategies.
"Whether you’re newly married, in a long-term partnership, or managing finances as a team, understanding the synergy between love, money, and taxes can help build long-term financial security," said CA Ruchika Bhagat, MD, Neeraj Bhagat & Co. Let's have a look at some ways you and your partner can save more together.
1. Understand Your Tax Status As A Couple
In India, individual tax filing is mandatory, even for married couples. But that doesn’t mean there’s no room for joint planning. If both partners are earning, they should assess their income slabs and design their investments accordingly.
Example: If one partner is in a higher tax bracket and the other is not, the lower-income partner can make investments under Section 80C, 80D, and NPS to balance the tax liability between the two.
2. Maximise Section 80C Benefits – Double The Deduction
Each individual can claim deductions up to Rs 1.5 lakh under Section 80C. So together, a couple can save tax on up to Rs 3 lakh worth of investments.
Some common options include:
- Public Provident Fund (PPF)
- Life Insurance Premiums
- Equity-Linked Saving Schemes (ELSS)
- Tax-saving Fixed Deposits
- Home loan principal repayment
- Tuition fees for children (up to 2 kids)
Smart Tip: According to Bhagat, if only one spouse is working, the other can still contribute to a PPF or invest in their name through gifts or transfers, although income clubbing rules must be taken into account.
3. Joint Home Loans: A Win-Win
If a couple jointly owns a property and both are co-borrowers of a home loan, each partner can claim:
- Rs 2 lakh deduction on interest (under Section 24(b))
- Rs 1.5 lakh on principal (under Section 80C)
This allows couples to double the tax benefits on housing loans. Ensure both names are on the property deed and both partners are contributing to EMI payments to claim deductions.
4. Health Insurance and Section 80D
Couples can also save through health insurance premiums. Under Section 80D:
- An individual can claim Rs 25,000 for self and spouse.
- Additional Rs 25,000 – Rs 50,000 can be claimed for parents, depending on age.
If both partners have separate policies, both can claim independently. Consider family floater plans for better coverage and tax benefits.
5. Gifting Between Spouses: No Tax, But Watch Clubbing
Gifts between spouses are not taxable, but any income earned from the gifted amount will be clubbed with the income of the giver. This rule must be managed strategically.
Example: If a husband gifts Rs 5 lakh to his wife, and she invests in an FD, the interest will be taxed in the husband’s hands.
Plan Smartly: "Use gifted funds to invest in tax-exempt instruments, such as PPFs or long-term, growth-oriented assets, so that the income is deferred or exempt," she said.
6. Tuition Fees And Children’s Plans
Under Section 80C, up to Rs 1.5 lakh of school tuition fees (for two children) is deductible. Child plans like Sukanya Samriddhi Yojana (for a daughter) or child ULIPs offer tax-saving avenues and future security.
One partner can claim tuition fees, while the other claims PPF/ELSS, thereby maximising Section 80C benefits.
7. Income Splitting And Investment Planning
If one partner is in a lower tax bracket, consider holding investments in their name to reduce overall tax liability. Long-term capital gains, dividends, or interest can be routed through the lower-earning partner.
Do proper documentation to avoid future tax complications.
