As the fiscal year comes to a finish, you'll be expected to present investment and expenditure receipts for tax deduction from your salary. As a result, you must file an Income Tax Return (ITR) by July 31, the deadline for settling your year income-related tax responsibilities. It is important to remember that the Indian government provides tax breaks and exemptions under several parts of the Income Tax Act of 1961.
Here are five tax-saving solutions for fiscal year 24:
1. Select the Appropriate Tax Regime
For Indian nationals, there are now two tax regimes. The taxpayer's desire for tax deductions determines the decision between the old and new tax systems. The new tax regime reduces the tax rate while eliminating tax deductions. There is no tax on income up to Rs 7 lakh under the new regime. You can also get a tax deduction of Rs 50,000. Taxpayers seeking section 80C deductions should use the former tax scheme, while others can use the new regime. For example, the tax liability for income of Rs 15.5 lakh and above up to Rs 5 crore will be the same under both regimes, with a deduction maximum of Rs 3.75 lakh (excluding standard deduction).
If you have a house loan or are eligible for House Rent Allowance (HRA), the former tax regime may be preferable. As a result, pick carefully between the two, utilizing online income tax calculators provided on the income tax website to estimate the difference.
2. Invest in Tax-Exempt Securities
The government offers tax deductions on certain instruments under section 80C of the Income Tax Act for individuals who choose the old regime. Taxpayers can claim deductions of up to Rs 1.5 lakh for investments in instruments such as:
PPF stands for Public Provident Fund
EPF stands for Employees' Provident Fund
ELSS (Equity Linked Savings Scheme)
NPS (National Pension System)
Sukanya Samriddhi Yojana (SSY) is a government welfare programme.
SCSS (Senior Citizen Savings Scheme)
Fixed Deposits (FDs) with maturities of 5 years or more Investing in these schemes, according to tax experts, not only saves taxes but also adds to long-term financial progress.
3. Obtain Health Insurance
Purchasing health insurance coverage for oneself and family members might result in tax savings. Taxpayers can deduct up to Rs 25,000 for health insurance premiums under section 80D of the Income Tax Act, and senior citizens can deduct up to Rs 50,000. When acquiring health insurance for parents, further savings might be realized. This deduction, however, is only possible under the former tax scheme.
4. Take Advantage of Tax Breaks on Home Loans
Individuals who have house loans from banks or non-banking financial institutions are eligible for interest and principal deductions. Section 24 enables a maximum deduction of Rs 2 lakh for house loan interest and Rs 1.5 lakh for home loan principal.
5. Submit Tax Returns on Time
Filing income tax forms by the deadline, which is usually July 31st, is critical to avoid fines. Failure to fulfill the deadline may result in penalties and may have an influence on a variety of processes, such as applying for a home loan, immigration documents, or high-value transactions.
While many people wait until the end of the fiscal year to invest in tax-saving programmes, experts urge starting early to maximize the benefits. This guarantees that the core goal of encouraging investments for future rewards is not undermined. Individuals can methodically obtain tax benefits and develop wealth by investigating numerous tax-saving possibilities. Finally, it is critical to be well-informed about the best tax-saving investment plans and to invest in products that are appropriate to particular financial objectives.
