Tax season often brings stress as many rush to complete their tax-saving investments before the year-end. To simplify the process for the 2023-24 financial year, here are five simple tax-saving strategies that can help you save income tax.
- Maximize Section 80C Deductions to save income tax
One of the easiest ways to save on taxes is by using Section 80C, which allows you to reduce your taxable income by up to ₹1.5 lakh every year. This applies to both individuals and Hindu Undivided Families (HUFs). You can claim this deduction if you opt for the old tax regime, but it doesn’t apply to those choosing the new tax regime.
Here are some popular ways to invest under Section 80C:
- Public Provident Fund (PPF)
- Employees’ Provident Fund (EPF)
- National Pension Scheme (NPS)
- Life insurance premiums
- Fixed deposits (5-year tenure or more)
- ELSS mutual funds
- Choose the Right Salary Components
Salaried individuals can lower their taxable income by selecting tax-friendly salary components. For example, claiming House Rent Allowance (HRA) if you’re renting can help reduce tax. Additionally, you can take advantage of reimbursements for phone/internet bills, education allowances, and food coupons, which can also offer tax benefits. These components allow you to claim deductions or exemptions, reducing your overall tax. - Contribute More to Your EPF
If you haven’t yet reached the ₹1.5 lakh limit for tax-saving investments, consider contributing more to your Voluntary Provident Fund (VPF). These voluntary contributions, along with your regular EPF, can be deducted from your taxable income. Additionally, your employer’s contribution to the National Pension Scheme (NPS), up to 10% of your salary, can further reduce your tax burden. - Claim Tax Benefits on Home Loan
If you have a home loan, you can claim deductions for both the interest and principal payments. These deductions are only available if you opt for the old tax regime. Note that the principal repayment is part of the ₹1.5 lakh limit under Section 80C, so keep that in mind when planning your tax-saving investments. - Benefit from Health Insurance Deductions
Health insurance premiums offer another way to reduce your taxable income. You can claim deductions for premiums paid for yourself, your spouse, children, and dependent parents. You’re eligible for up to ₹25,000 in deductions for yourself and your family, and ₹50,000 if you’re covering senior citizen parents. This helps reduce your tax while ensuring your family’s medical expenses are covered.
By using these simple strategies, you can save more on your taxes and ensure that your finances are in top shape before the end of the fiscal year.
