Last-minute tax planning? Take a look at the best income tax saving schemes

Tax planning is your weapon to dodge tax bullets and boost your bank balance. The Income Tax Act offers numerous opportunities for your investments, savings, and expenses. Take a look at the schemes

The deadline for the tax savings exercise for the current financial year, 2023-24, is March 31, 2024. Remember, a penny saved is a penny earned. For this, tax planning is your weapon to dodge the tax bullets and boost your bank balance. The Income Tax Act offers numerous opportunities for your investments, savings, and expenses.

Business Standard delves into some effective strategies that will help mitigate your tax liabilities:

Home loan advantages for tax savings

Acquiring a home loan not only brings you closer to owning your dream home but also offers substantial tax benefits. Government initiatives like the Pradhan Mantri Awas Yojana (PMAY) and the Delhi Development Authority (DDA) Housing Scheme aim to facilitate affordable housing. Furthermore, tax benefits under Sections 80C and 24(b) of the Income Tax Act reduce your tax obligations by allowing deductions on principal repayment and interest paid on home loans. Specifically, Section 80C permits deductions up to Rs 1.5 lakh for principal repayments, while Section 24(b) offers exemptions on interest payments up to Rs 2 lakh annually. Additional benefits are available for first-time homeowners and those renting out their properties.

 

Tax deductions through health insurance

Investing in a health insurance policy not only secures your well-being but also provides financial benefits in the form of tax deductions. Under Section 80D, taxpayers can deduct the premium amounts paid from their taxable income, with the deduction amount varying based on the age of the insured individuals.

Investing in government schemes for tax relief

Several government-backed schemes present opportunities for not only securing high returns but also availing tax exemptions. Investments in schemes like the Senior Citizen Savings Scheme (SCSS), Sukanya Samriddhi Yojana (SSY), National Pension Scheme (NPS), and Public Provident Fund (PPF) can lead to tax waivers under Section 80C, up to a limit of Rs 1.5 lakh.

Life insurance plans

Life insurance plans offer a twofold advantage – financial security and tax savings. Premium payments towards these policies are deductible under Section 80C, while proceeds received upon maturity or the policyholder's death are exempt from tax under Section 10(10D), subject to conditions.

Beyond Section 80C

In addition to the well-known deductions under Section 80C, the Income Tax Act provides other sections for further tax relief. For instance, medical insurance premiums can lead to deductions under Section 80D, with specific limits based on the insured's age and relationship to the policyholder. Interest on home loans and education loans also qualifies for deductions under Sections 24, 80EE, and 80E, providing further avenues to reduce your taxable income.

Tax deductions for donations

Donating to approved institutions or funds not only supports worthy causes but also offers tax deductions under Section 80G. This provision encourages charitable acts by making them financially beneficial for the donor.