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Tax Benefits for Woman-Owned Business

The tax system in India is gender-neutral, where women and men are taxed equally on their respective incomes. Previously, women enjoyed tax relaxation on their income, but from FY 2012-13, gender-specific tax relaxations have been removed.

Tax* in India is equal to men's and women’s income, and largely, the tax system is gender-neutral. People belonging to any gender running a business pay corporate tax and income tax. Everyone pays the GST@ or Goods and Service Tax — the producers and the consumers.

However, this does not mean you cannot enjoy any tax deductions as a female business owner. Being covered under the same tax rules, women entrepreneurs are entitled to the same tax deductions available under the Income Tax Act.

If you are interested to know what are the tax benefits of female-owned businesses, keep reading this blog. Here, we have also mentioned some tax deductions for women-owned businesses. These schemes have been introduced to encourage women entrepreneurship.

Tax Benefits for Woman-Owned Businesses

As we have mentioned already, women-owned businesses do not enjoy any exclusive tax benefits. However, women running their own businesses can save tax using conventional methods allowed by the Income Tax Department.

Women entrepreneurs can claim tax benefits under section 80 of the Income Tax Act for expenditures like:
 

  • Gross earnings
  • Business loans
  • Insurance policy premium
  • Property purchase

Tax Benefits that Women Entrepreneurs Can Claim

Section 80C
 

Women business owners can claim tax deductions of up to ₹1.5 lakhs per financial year from their total income. The deductions are allowed under Section 80C for a financial year and for investments made towards the following:
 

  • National Savings Certificate
  • PPF (Public Provident Fund)
  • Employees Provident Fund
  • National Pension Scheme
  • Equity Linked Savings Scheme (ELSS)
  • 5-Year Tax-Saver Fixed Deposits
     

Section 80E

If a woman entrepreneur takes a loan to finance higher education for herself or her spouse or children, she can claim tax deductions. The female taxpayer can claim a deduction on the interest component of the monthly EMI paid towards loan repayment.
 

Section 80CCG

If you earn a gross annual income of up to ₹12 lakhs and have never invested in equity, you can secure tax exemptions on your first equity investment. Rajiv Gandhi Equity Saving Scheme (RGESS) allows a tax deduction on 50% of your first-time equity investment amount, not exceeding ₹50,000.
 

Suppose your total taxable income is ₹6,00,000 per annum, and you invest ₹50,000 in equity2. Under RGESS, you will be entitled to a tax deduction on ₹25,000. So, after the investment, your total taxable income will be ₹5,75,000.
 

Apart from these sections, you can claim tax benefits under —

  • Section 24 that allows a tax deduction of up to ₹2 lakhs per assessment year on interest paid towards a home loan.
  • Section 80EEA that allows tax deduction of up to ₹1.5 lakhs per assessment year for paying a home loan for property worth not more than ₹45 lakhs (stamp value).
  • Section 80D that allows a tax deduction for paying health insurance premiums for self/dependant children/parents.
  • Section 10(10D) allows tax exemption on the sum assured and accrued bonus3 received through a life insurance policy claim.

 

Tax Benefits for Women on a Business Loan

If you are repaying a loan that you took for business-specific needs, you can avail of tax deductions by writing off the interest payable as business expenditure. However, this tax deduction is only available on the interest component of the EMI payments.

Conclusion

Recently, the W20 Communique 2023 has urged G20 leaders to provide a minimum 15% tax break, or other equivalent incentives, for tech or tech-enabled startups led by women. While this has been proposed, it awaits a decision from the global leaders.

There are no female-owned business tax breaks in India, but women entrepreneurs get special loan facilities from the government and can avail of the gender-neutral tax deductions specific to them under the ITA.

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Frequently Asked Questions

What is the tax exemption limit for women in India?

Women and men have equal tax slabs, and none of them need to pay any income taxes up to an annual income of ₹2,50,000.

What are the Government investment schemes for women?

Indian government investment schemes are gender-neutral, and anyone can invest. Here are some of the popular investment schemes that women can choose for investments:

  • PPF (Public Provident Fund)
  • Government Saving Bonds
  • E-Kisan Vikas Patra Scheme
  • SSY (Sukanya Samriddhi Scheme)
  • Gold Monetisation Scheme
  • NSC (National Saving Certificate)
  • Mahila Samman Savings Certificate

Where can women apply for small business loans?

The government of India encourages women's entrepreneurship by offering Various government loan schemes. Female owners of small businesses can get Mudra loans. Other than that, banks offer several schemes to women entrepreneurs.

Disclaimers

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • Tax:*  Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.
  • GST : @All Premiums, Charges, and interest payable under the policy are exclusive of applicable taxes, duties, surcharge, cesses or levies which will be entirely borne/ paid by the Policyholder, in addition to the payment of such Premium, charges or interest. Tata AIA Life shall have the right to claim, deduct, adjust and recover the amount of any applicable tax or imposition, levied by any statutory or administrative body, from the benefits payable under the Policy
  • 2Market-linked returns are subject to market risks and terms & conditions of the product. The assumed rate of returns or illustrated amount may not be guaranteed and depends on market fluctuations.
  • Bonus: 3These bonuses are not guaranteed in nature. The Company may declare Cash Bonus rate annually in advance. The Cash Bonuses if declared, will be applicable provided all due premiums have been paid.