Any business owned by a woman in India is eligible for the Government’s various tax incentives. Numerous sections under the Income Tax Act (ITA) offer lucrative tax deductions that can bring down your taxable income favourably. Read the complete details below.

Do women-owned businesses enjoy special tax benefits?

Until the FY 2011-12, the basic tax limit/slab, or the applicable tax rates based on income and age, was segregated for men and women taxpayers. Meaning women were paying less tax than men who earned the same income. 

But from FY 2012-13 onwards, standard tax slabs were introduced for both men and women. And because of this, women-run companies currently do not enjoy any specific tax rebates or exemptions. 

However, notwithstanding the new tax slab, women entrepreneurs can still leverage various taxable income benefits and save money when filing their yearly taxes. 

For a woman-owned business, tax benefits under Section 80 of the ITA comprise tax deductions, exemptions, and rebates on expenditure like:

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

Additional Read: Government Schemes That Help Women Entrepreneurs in India

If you are a women-led business in India, here are the tax exemptions you can enjoy as recorded in the ITA’s Section 80:

Section 80C

You can claim tax deductions of up to Rs. 1.5 lakhs from your total income under Section 80C, from any of the following:

  • National Savings Certificate
  • Equity Linked Savings Scheme
  • National Pension Scheme
  • 5-year tax-saver fixed deposits
  • Employees Provident Fund

And more!

Section 80E

For women entrepreneurs, loantaken to finance higher education is also tax-deductible. Whether you borrow the funds for your children, spouse, or yourself; you can secure deductions on the interest you pay to service the monthly EMIs on your education loan.

Section 80CCG

If your annual gross income is less than Rs. 12 lakhs, you can secure tax exemptions on your equity investments under the Rajiv Gandhi Equity Saving Scheme (RGESS).

Tax benefits on a business loan

If you’re presently paying back a debt incurred for business-specific needs, you can write off the interest payable as business expenditure and avail the tax deductions accordingly.

To incentivise female entrepreneurs and promote women empowerment, loanadvanced to a woman-led business is considered in the total taxable income. However, tax deductions are only available on the amount women pay towards the interest component of their EMI payments.

Additional Read: Tax Benefits on Business Loan

To sum up

Even if you’ve missed a deduction claim, you can still avail the same when filing your ITR. In such a case, the Income Tax Department refunds any excess money you paid as tax.

Moreover, one of the easiest ways to reduce your taxable income and meet the operational business expenses optimally is by obtaining a business credit facility. At Tata Capital, you can borrow business loans at incredibly competitiveentrepreneurs is offered with relaxed business loan eligibility criteria and minimal documentation. So, why wait? Get in touch with us for further details right away!

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