5 ways working couples can save income tax !!

In some cases one spouse, say the wife, may be paying the life insurance premium (LIP), say of Rs 25,000, and her total income is say Rs 215,000 she may like to pay the life insurance premium herself so as to get deduction under Section 80C and bring down the total income to Rs 190,000 so that she may not be liable to pay any tax for the fiscal year 2010-2011.
It may be that in her husband's case full deduction may not be available for Rs 100,000 under Section 80C and his income may be liable to the maximum rate of tax.
Then, it would be better and worthwhile to claim the deduction in her husband's name rather than that of the wife.
This is because deduction of LIP under the higher income tax slab would lead to a higher overall tax deduction 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.
For example, A is a landlady and is staying in her house with other members of her family.
If her husband gets a house rent allowance which can be claimed exempt from income tax, then he may pay house rent to his wife and claim exemption in respect of the house rent so paid by him from house rent allowance to the extent deductible under the provisions of Rule 2A.
In the above case, the landlady Mrs. A is also employed and she gets a rent, say of Rs 30,000 per month from her husband and the husband is able to take full benefit of the amount by way of exemption of house rent allowance, then this will result into a lower rate of tax because of deductibility of 30 per cent deduction from the rent under Section 24.
Thus, even if Mrs A were to pay tax on Rs 360,000 rent she would not pay tax on the whole of it but only on Rs. 360,000, less 30 per cent thereof, i.e., Rs 360,000, minus Rs 108,000 on Rs 252,000 only.
The effective highest rate would be 21 per cent only.
Thus, a saving of 9 per cent of income tax on Rs 360,000, i.e. Rs 32,400 would be possible in the case of this couple.
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. Create an HuF
Both husband and wife should, by having gifts from some older relations in the family have a separate Hindu Undivided Family so as to claim an additional  separate exemption of Rs 160,000 through proper tax planning for the FY 2010-11 (A.Y 2011-12).


5. 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.
If the couple does not have a child, then the husband can have a trust for the unborn son, and the wife a trust for the unborn child daughter to get a separate exemption of Rs 160,000 each.
Besides, if you worship some deity, you can have a private religious trust for one's chosen deity.
Such a trust would be liable to assessment as a separate taxpayer under the category of artificial juridical person and would enjoy a separate exemption of Rs 160,000.
This is how working couples can save a fair amount of income tax through proper planning.