Income Tax: Last two weeks are left to invest in tax saving instruments to be able to claim tax deduction for FY 2024-25. So, if you have opted for the old tax regime or plan to opt for it at the time of filing your tax return – you should invest in tax-saving schemes prior to March 31, 2025.
Notably, if your tax calculation in the new tax regime is lower than in the old tax regime (even after including tax deductions) — it is recommended to continue with the new tax regime and not bother much about investing in saving schemes merely for the sake of saving tax.
These are some of the points you need to consider:
I. Deadline: Tax payers must invest in tax-saving schemes before March 31 to be able to claim tax deduction for FY 2023-24. Meanwhile, if you invest after March, it will be considered as tax saving for next year.
2. Tax saving instruments: There are multiple options to invest in tax saving instruments. You could invest in schemes given under section 80C, 80CCC, 80CCD(1) and 80G.
Tax saving schemes under 80C include NSC (National Savings Certificate), PPF (Public Provident Fund), KVP (Kisan Vikas Patra), SSY (Sukanya Samriddhi Yojana) and SCSS (Senior Citizen Savings Scheme).
Meanwhile, section 80CCC entails contributions to certain pension plans offered by life insurance and 80CCD(1) entails contributions made to NPS. At the same time, 80G deals with tax deduction for contributions to relief funds and charitable institutions.
3. Maximum limit: The maximum limit for all saving instruments under section 80C, 80CCC and 80CCD (1) is ₹1.5 lakh.
4. Although you could invest a higher amount than ₹1.5 lakh but tax deduction will be allowed only upto the maximum cap of ₹1.5 lakh.
5. New tax regime: As mentioned above, one has to take a key decision whether to choose old tax regime (to become entitled to invest in tax saving instruments) or new regime (where you lose entitlement to invest in tax-saving instruments). This decision can be taken by using income tax calculator given on the income tax department website.
Here, you can evaluate which tax regime will lead to how much income tax liability based on inputs you enter.
Visit here for all personal finance updates
