Income Tax News: You will shortly need to submit your investment and expense receipts for tax deductions from your pay as the fiscal year comes to an end. After that, you must file an Income Tax Return (ITR) by July 31. This is your last chance to pay your annual income-related taxes. It is important to remember that under different sections of the Income Tax Act, 1961, the Indian government provides tax exemptions and deductions. Here are Ten tax-saving ideas for you for FY24, in case you want to use them.
Select the Appropriate Tax Regime
For Indian citizens, there are currently two different tax regimes. The taxpayer’s preference for tax deductions determines which of the two tax regimes they prefer. Tax deductions are eliminated but the tax rate is lowered under the new tax system. There is no tax on income up to Rs 7 lakh under the new tax system. Additionally, a Rs 50,000 tax deduction is available to you. If a taxpayer is looking to deduct under section 80C, they should use the previous tax regime; otherwise, they can use the new one.
Public Provident Fund
The principal amount invested in a PPF as an account is exempt from income tax. Under section 80C of the Income Tax Act of 1961, the full investment value is eligible for a tax waiver. It is important to remember that the maximum amount of principal that can be invested in a single financial year is Rs. 1.5 lakh. Additionally excluded from all tax computations is the total interest earned on a PPF investment.
Employees’ Provident Fund
Employee contributions to their PF account are exempt from taxes under Section 80C of the Indian Income Tax Act. Additionally, income received from EPFO schemes is tax-free. Up to Rs. 1.5 Lakh can be used as the maximum amount of this exemption.
Equity Linked Savings Scheme
The three-year lockup period on ELSS funds means that short-term profit gains cannot be realised. You can only make long-term capital gains as a result. Up to Rs 1 lakh in annual earnings, these gains are tax-free; any amount earned above this threshold is subject to a 10% long-term capital gains tax. As previously stated, you can deduct taxes on the principal you invest in an ELSS plan under Section 80C of the Income Tax Act. This is a cumulative deduction benefit, so if you invest in any of the specified instruments (ELSS, NSC, PPF, etc.), you can deduct up to Rs. 1.5 lakh from your taxes under the aforementioned section.
National Pension System
Within the overall Rs. 1.50 lakh ceiling under Sec. 80 CCE, tax deductions up to 10% of salary (Basic + DA) are allowed under section 80 CCD(1). In addition to the overall cap of Rs. 1.50 lakh under Sec. 80 CCE, there is a tax deduction of up to ₹50,000 under section 80 CCD(1B).
Sukanya Samriddhi Yojana
Tax exemptions apply to the principal amount deposited, interest accrued over the full term, and maturity benefits. Up to Rs 1.5 lakh, the principal amount is deductible under Section 80C.
Senior Citizen Savings Scheme
With its substantial returns, tax benefits, and capital security, SCSS is among the best investment choices for senior citizens. Under Section 80C of the Income Tax Act, 1961, the principal amount deposited in a SCSS account is tax deductible up to a maximum of Rs. 1.5 Lakh. Nevertheless, this exemption is limited to the current tax structure. If a person decides to file tax returns using the new framework unveiled in the Union Budget 2021, it is not permitted.
Purchasing health insurance policies for oneself and one’s family members can result in tax savings. Taxpayers may deduct up to Rs 25,000 for health insurance premiums under section 80D of the Income Tax Act, and senior citizens may deduct up to Rs 50,000. Buying health insurance for parents can result in additional savings. But this deduction is only available in the context of the previous tax system.
Bank and non-banking financial institutions that grant home loans to individuals qualify for deductions on principal and interest payments. A maximum deduction of Rs 2 lakh can be made for home loan interest under Section 24, and Rs 1.5 lakh can be deducted for home loan principal under Section 80C.
Pay your income taxes on schedule
To avoid penalties, income tax returns must be filed by the specified deadline, which is usually July 31st. Missing the deadline can lead to fines and affect a number of procedures, such as obtaining immigration paperwork, a home loan, or high-value transactions.
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