Income Tax: It becomes essential to take well-informed decisions about tax-saving investments before the March 31 deadline, especially for those who opt for the old tax regime. It is not recommended to randomly allocate money to any tax-saving option.
Assess Existing Section 80C Investments
“Evaluate current investments like insurance premiums, EPF contributions, etc. Deduct this from the ₹1.5 lakh limit to know the remaining eligible amount,” said Abhishek Soni, CEO and Co-founder of Tax2win
Popular Section 80C Options
Consider LIC policies, PPF, Fixed Deposits, and Tax Saver Mutual Funds.
National Pension System (NPS)
Contributions to NPS are eligible for tax deductions under Section 80CCD(1B) over and above the limit of Section 80C. Additionally, taxpayers can claim an additional deduction of up to Rs. 50,000 under this section.
“For saving further tax you can consider putting up to ₹50,000 every year in an NPS account to claim an exclusive deduction under Section 80 CCD(1B). This will take your deduction to ₹2 lakh,” said Mumbai-based tax and investment expert Balwant Jain.
Health Insurance
Premiums paid towards health insurance policies for self, spouse, children, and parents are eligible for tax deductions under Section 80D.
“Medical insurance premium to be claimed at Rs. 50,000. ( ₹25,000 for self-spouse and children and ₹25,000 for dependent parents below 60 years). Claim medical insurance premium paid up to a maximum of ₹1,00,000 per annum if availed for senior citizens. If senior citizens are not covered under any health insurance, then medical expenditure incurred can be claimed under 80D up to ₹50,000,” said Clear founder and CEO Archit Gupta.
Interest paid on a home loan
Interest paid on a home loan can be claimed as a deduction under section 24 up to ₹2 lakh.
As per Archit Gupta, Section 80EE also allows you to claim a deduction of up to ₹50,000 on home loan interest which is over and above the limit of section 24.
A home loan would also help you in reducing your taxable income as the principal portion of the home loan can be claimed under Section 80C up to ₹1.5 lakh and the interest portion can be claimed as a deduction from income from house property, added Gupta.
By strategically leveraging these options that are aligned with your financial goals, you can optimize tax-saving investments before the deadline. Consulting a tax expert can offer personalized advice.
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