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Income Tax Saving: There are only a few days left for the financial year 2023-24 to end and you will have to pay income tax on the income earned during this financial year… You will file the account of tax paid on the income of the whole year i.e. ITR (Income Tax Return) only till July 2024, but the income tax will have to be paid before 31 March 2024, otherwise interest and penalty will have to be paid later i.e. while filing ITR… We have already told many times in many such 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 system i.e. old income tax system…
Top 10 Tips to Save Income Tax
Save under section 80C of the Income Tax Act: Provident fund deducted from your salary under section 80C of the Income Tax Act, amount deposited in pension fund under 80CCC, premium deposited for life insurance policy, investment made in NSC i.e. National Savings Certificate, interest earned 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 NPS Account: Apart from the exemption under section 80C, you can get a deduction of Rs 50,000 (Section 80CCD1B of the Income Tax Act) on investments made in the National Pension Scheme (NPS). So, if you have enough money to save, invest in this scheme. This will not only save income tax on investments made every year, but will also provide 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 it 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, you can get tax exemption on an amount of Rs 10,000 from the interest received from your savings account (or all savings accounts), that is, you can deduct it from your taxable income.
However, the thing to remember here is that the interest received on fixed deposit or recurring deposit is not tax free.
Exemption on House Rent Allowance (HRA) or interest paid on home loan: Many employed people take home loans while buying a house, the EMI of which 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 year. 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 income tax exemption by giving house rent receipt, the method of calculating which you can read here – How to calculate HRA rebate or HRA exemption.
Discount on Health Insurance Premium: If you are below 60 years of age and you are paying premium for health insurance policy for yourself, spouse or dependent children, then you can get income tax exemption of up to Rs 25,000, but if your parents are above 60 years of age and you are paying premium for them too, then you can get additional exemption of up to Rs 50,000. Under this section of the 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.
Discount is also available on 80DD: God forbid, if any of your dependents is disabled, but if yes, then you can get income tax exemption on the expenditure 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 expenditure made on them.
Income tax exemption is also available on 80DDB: Under Section 80DDB of the Income Tax Act, tax exemption is available on the amount spent on the treatment of a specific disease of a dependent. These diseases include diseases like dementia, aphasia, Parkinson's, cancer, AIDS, renal failure, hemophilia and thalassemia. Dependents can include husband-wife, children, parents or siblings. Under this section, if the age of the dependent patient is less than 60 years, then a deduction of up to Rs 40,000 can be given and if the age of the dependent patient is more than 60 years, then expenses up to Rs 1,00,000 can be deducted from taxable income.
Deduction 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 self, spouse, children or children 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 remember, 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, you will not get tax exemption on 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 in this item in subsequent years.
Choose the right tax regime for you: For the last three-four years, two systems are in place for calculation and payment of income tax, which are called old tax system and new tax system. All these exemptions are given in the old tax system, but the tax slabs i.e. income tax rates are a little higher. In the new tax system, most of the exemptions are not given, but the tax rates are quite low. Therefore, calculate very carefully and decide- how much is your saving, how much exemption can be availed in total and which will benefit you more- staying in the old system after getting the exemption or paying tax under the new system without taking the exemption. You can read about it in detail here- New tax system or old income tax system: Understand from the chart, which is beneficial for the taxpayer
Pay taxes on time and file ITR on time: After paying tax on the income earned in every financial year, you have to share your account with the Income Tax Department, which is called filing Income Tax Return (ITR). For the financial year ending on March 31, ITR has to be filed by July 31 of the same year, but this date is sometimes extended. But remember, if any tax liability of yours comes to the fore at that time, and you did not deposit the tax of that amount before March 31, then you will have to pay interest on that amount, and some penalty as well. Apart from this, a heavy penalty is also levied for filing ITR after the due date, which will definitely cause you trouble, therefore, it is always better to calculate and estimate your tax liability before March 31, and also deposit the self-assessment tax on it before March 31, so that interest and penalty can be avoided, and yes, also submit the income tax return on time i.e. before July 31, so that the penalty amount can be saved. (Also read – Savers will suffer loss in the new tax system – understand from the chart)
