Table Of Content
- Understanding the Tax Regimes
- Key Updates for FY 2024-25
- Tax Saving Strategies
- 1. Utilize Section 80C Deductions
- 2. Contribute to National Pension System (NPS)
- 3. Claim Health Insurance Premiums (Section 80D)
- 4. Home Loan Benefits
- 5. Education Loan Interest (Section 80E)
- 6. Savings Account Interest (Section 80TTA/80TTB)
- Choosing Between Old and New Tax Regimes
- Frequently Asked Questions (FAQs)
- How can I save tax under the new regime?
- Is NPS a good investment for tax saving?
- Can I switch between tax regimes every year?
- What is the deadline for filing ITR for FY 2024-25?
- Are there any tax benefits for senior citizens?
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Tax Saving Tips for FY 2024-25: A Comprehensive Guide
Navigating the complexities of income tax can be daunting, but with informed planning, you can effectively reduce your tax liability for the financial year 2024-25. This guide provides practical strategies to help you save on taxes, incorporating the latest updates and high-traffic keywords such as “income tax” and “how to save tax.”
Understanding the Tax Regimes
India offers two tax regimes:
- Old Tax Regime: Allows various deductions and exemptions.
- New Tax Regime: Features lower tax rates but limited deductions.
Choosing between them depends on your income structure and eligible deductions.
Key Updates for FY 2024-25
- Standard Deduction: Increased to ₹75,000 under the new tax regime.
- NPS Employer Contribution: Deduction limit raised to 14% of basic salary under the new regime.
- ITR Filing: ITR-1 and ITR-4 forms are available for online filing for AY 2025-26.
Tax Saving Strategies
1. Utilize Section 80C Deductions
Investments and expenses eligible under Section 80C can provide deductions up to ₹1.5 lakh.
- Public Provident Fund (PPF): Long-term investment with tax-free interest.
- National Savings Certificate (NSC): Fixed-income investment with a 5-year lock-in.
- Equity-Linked Savings Scheme (ELSS): Mutual funds with a 3-year lock-in and potential for higher returns.
- Life Insurance Premiums: Premiums paid for life insurance policies.
2. Contribute to National Pension System (NPS)
NPS offers additional tax benefits:
- Section 80CCD(1B): Additional deduction of ₹50,000 over and above Section 80C.
- Section 80CCD(2): Employer’s contribution up to 14% of salary deductible under the new regime.
3. Claim Health Insurance Premiums (Section 80D)
Deduct premiums paid for health insurance:
- Up to ₹25,000 for self and family.
- Additional ₹25,000 for parents below 60 years; ₹50,000 if parents are above 60.
4. Home Loan Benefits
Interest paid on home loans is deductible:
- Section 24(b): Deduction up to ₹2 lakh on interest paid.
- Section 80EEA: Additional deduction of ₹1.5 lakh for affordable housing loans sanctioned before a specific date.
5. Education Loan Interest (Section 80E)
Interest paid on education loans is fully deductible for up to 8 years.
6. Savings Account Interest (Section 80TTA/80TTB)
- Section 80TTA: Deduction up to ₹10,000 on savings account interest for individuals below 60.
- Section 80TTB: Deduction up to ₹50,000 for senior citizens.
Choosing Between Old and New Tax Regimes
Evaluate your deductions and exemptions:
- Old Regime: Beneficial if you have significant deductions.
- New Regime: Simpler with lower rates but fewer deductions.
Use Income Tax calculators to compare tax liabilities under both regimes.
Frequently Asked Questions (FAQs)
How can I save tax under the new regime?
Under the new regime, you can claim:
- Standard deduction of ₹75,000.
- Employer’s NPS contribution up to 14% of salary.
- Rebate under Section 87A for income up to ₹7 lakh.
Is NPS a good investment for tax saving?
Yes, NPS offers additional deductions and helps in building a retirement corpus.
Can I switch between tax regimes every year?
Salaried individuals can choose between regimes each year. However, those with business income have restrictions on switching.
What is the deadline for filing ITR for FY 2024-25?
The due date is typically July 31, 2025, unless extended by the government.
Are there any tax benefits for senior citizens?
Yes, senior citizens have higher exemption limits and can claim deductions under Section 80TTB.
Implementing these strategies can significantly reduce your tax liability. Always consult with a tax professional to tailor these tips to your financial situation.
