Income Tax Save: There are just a few more days left for the end of FY 2023-24, i.e. the financial year 2023-24, and you will have to pay income tax on the income you earned during this financial year… You will file the account of the tax paid on the year’s income, i.e. ITR (Income Tax Return) only till July 2024, but the income tax will have to be paid before March 31, 2024, otherwise later, i.e. interest and penalty will have to be paid while filing ITR… We have already told many times in many similar news that in which items or schemes one can invest to save income tax, but today we are telling you such top 10 tricks, with the help of which those people can save a lot of income tax, who are going to file ITR under the old tax regime, i.e. Old Income Tax Regime…
TOP 10 TIPS to save income tax
Sections of Income Tax Act Do savings under 80C: Under Section 80C of the Income Tax Act, your Provident Fund deducted from your salary, amount deposited in pension fund under 80CCC, premium deposited for life insurance policy, investment made in NSC, i.e. National Savings Certificate, accrued interest on old NSC, investment made in PPF, i.e. Public Provident Fund, Unit Linked Insurance Plan (ULIP), children’s tuition fees, fixed deposits of more than 5 years, equity linked savings scheme, principal paid on home loan, investment made in Sukanya Samriddhi Yojana etc., a total exemption of Rs 1,50,000 is given on the investment made in these schemes. That is, an amount up to Rs 1,50,000 from the amount invested in these schemes is deducted from your taxable income.
Open an NPS account: Apart from the exemption under section 80C, you can get a deduction of Rs 50,000 (Section 80CCD1B of Income Tax Act) on investment made in National Pension Scheme, i.e. NPS. So, if you have sufficient amount for saving, then definitely invest in this scheme. This will not only save income tax on the investment made every year, but you will also get the pleasure of pension after retirement.
Keep in mind section 80TTA: Many people are not aware that the interest received on the amount deposited in the savings account of banks is also taxable, and income tax has to be paid on that too. But under section 80TTA of the Income Tax Act, you get income tax exemption on interest up to Rs 10,000 received on the amount deposited in the savings account. Simply put, out of the interest you get from your savings account (or all savings accounts), you can get tax exemption on an amount of Rs 10,000, that is, you can deduct it from your taxable income.
By the way, the thing to remember here is that the interest received on fixed deposits or recurring deposits is not tax free.
Exemption on house rent allowance (HRA) or interest paid on home loan: Many employed people take a home loan when they buy a house, whose EMI has to be paid regularly. Out of the amount of interest paid to the bank in that EMI, tax exemption can be availed on an amount up to Rs 2,00,000 per annum. That is, out of the interest you are paying in your total EMI, an amount of Rs 2,00,000 is tax free. Apart from this, those who are not able to buy a house at present, and live in a rented house, can also get exemption in income tax by giving house rent receipt, the method of calculating which you can read here – How to calculate HRA Rebate or HRA Exemption.
Exemption on health insurance premium: If you are below 60 years of age and are paying premium for health insurance policy for yourself, spouse or dependent children, then you can get income tax exemption up to Rs 25,000, but at the same time, if your parents are above 60 years of age and you are paying premium for them as well, then you can get additional exemption of up to Rs 50,000. Under this section of Income Tax Act, if your age is also above 60 years, then you can get exemption on premium up to Rs 50,000 instead of Rs 25,000 for yourself.
Exemption is also available on 80DD: God forbid, if any of your dependents is disabled, but if there is, then you can get income tax exemption on the expenses made on them. In these cases, if the disability is 40 to 80 percent, then a deduction of up to Rs 75,000 can be obtained, and if the disability is more than 80 percent, then a deduction of Rs 1,25,000 can be obtained on the expenses incurred on them.
Income tax exemption is also available on 80DDB: Under Section 80DDB of the Income Tax Act, tax exemption is given on the amount spent on the treatment of a particular disease of a dependent. These diseases include diseases like dementia, aphasia, Parkinson’s, cancer, AIDS, renal failure, hemophilia and thalassemia. Those included among the dependents can be spouse, children, parents or siblings. Under this section, if the patient dependent is below 60 years of age, then a deduction of up to Rs 40,000 can be availed, and if the patient dependent is above 60 years of age, then expenses up to Rs 1,00,000 can be deducted from the taxable income.
Exemption will also be available on education loan interest (80E): Under Section 80E of the Income Tax Act, interest paid on education loan (for higher studies) taken for yourself, spouse, children or children of whom you are the legal guardian is deducted from taxable income. The entire amount of interest paid under this section is considered tax free, and there is no maximum limit, but keep in mind, the interest amount is tax free only for a maximum of 8 years, and if you repay the loan in a period of more than 8 years, then you will not get tax exemption on the interest paid after 8 years. And yes, even if the loan is repaid in a period of less than 8 years, no exemption will be given under this head in subsequent years.
Choose the right tax regime for yourself: For the last three-four years, there are two systems for calculating and paying income tax, which are called the Old Tax Regime and the New Tax Regime. All these exemptions are given in the old tax regime, but the tax slabs, i.e. the income tax rates, are a bit higher. In the new tax regime, most of the exemptions are not given, but the tax rates are quite low. So, decide after calculating very carefully – how much are your savings, how many exemptions can you get in total, and which will benefit you more – getting the exemption and remaining in the old regime or paying tax under the new regime without taking the exemption. You can read about this in detail here – New tax system or Old Income Tax Regime: Understand from the chart, which is beneficial for the taxpayer
Pay tax on time and file ITR on time: After paying tax on the income earned in every financial year, you have to share your accounts with the Income Tax Department, which is called filing Income Tax Return (ITR). For the financial year ending on 31st March, ITR has to be filed by 31st July of the same year, but this date is sometimes extended. But remember, if any of your tax liabilities come to light at that time, and you had not deposited that amount of tax before 31st March, then you have to pay interest on that amount, and some penalty as well. Apart from this, a huge penalty is also charged for filing ITR after the due date, which will definitely cause you trouble, so, it is always better to calculate before 31st March and estimate your tax liability, and also deposit the self-assessment tax on it before 31st March, so that interest and penalty can be avoided, and yes, also submit the income tax return on time, that is, before 31st July, so that the penalty amount can be saved. (Also read – Savers will suffer loss in New Tax Regime – Understand from the chart)
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