Income tax filing season is here, which can be stressful and confusing, but it's necessary to file your taxes in order to stay out of legal trouble. The idea of submitting ITRs is closely associated with the goal of paid persons to reduce their income tax liability.
They are always searching for methods to reduce taxes while staying within the law. In order to identify strategies to avoid taxes before filing your income tax returns for FY 2023–2024, Indiatoday.in spoke with specialists.
Five Strategies to Reduce your Taxes
Dr. Suresh Surana, the founder of RSM India, emphasized the significance of the Public Provident Fund (PPF). PPF is a long-term investment plan supported by the government that falls under the Exempt-Exempt-Exempt (or "EEE") category. This implies that interest received on PPF accounts, withdrawals from PPF, and donations to PPF accounts are all tax free.
"The government sets the interest rate for PPF, which is often greater than the return on bank savings. According to Surana, the present interest rate on PPF is 7.1% annually.
The Equity-Linked Savings Plan, or ELSS, Dr. Surana also talks about the Equity-Linked Savings Scheme (ELSS) as another way to save taxes. A mutual fund program called ELSS focuses mostly on stock market investments. Up to a maximum of Rs 1.5 lakh each fiscal year, investments made in ELSS funds are eligible for deductions under Section 80C of the Income Tax Act. Investors should be aware that these investments have a three-year lock-in period.
National Pension System (NPS): Acube Ventures Director Ashish Agarwal provided clarification on the NPS. NPS is an optional long-term savings program that falls under the Income Tax Act's Section 80CCD(1B). A tax advantage of up to Rs 50,000 is provided by contributions to NPS, on top of the present Section 80C tax-free maximum. Additionally, 60% of the NPS corpus is tax-free at maturity.
Tax-Free Bonds: "With the government's support, tax-free government bonds are yet another alluring investment option," stated Agarwal. These bonds can be traded on stock markets, but they have set maturity dates.
Last but not least, Agarwal emphasized the Sukanya Samriddhi Yojana (SSY), a savings program created especially for the advantage of girls. Section 80C of the Income Tax Act allows deductions for investments made under the SSY. Under the SSY, both the interest earned and the maturity amount are tax-free.
Taxpayers can take advantage of these opportunities to maximize their tax savings for the fiscal year 2023–24 as the tax filing season gets begun. To ascertain the best tactics appropriate for their financial objectives and circumstances, people should speak with tax advisers or financial specialists.
