EXPLORE LAST-MINUTE OPTIONS TO SAVE INCOME TAX IN OLD REGIME

 

EXPLORE LAST-MINUTE OPTIONS TO SAVE INCOME TAX IN OLD REGIME

ELSS funds, PPF, NPS, fixed deposits are some popular options under Section 80C

With less than a week left to make tax-saving investments for FY24, there is a risk that people will hurry and make the wrong choice to meet the March 31 deadline. Invest in a hurry, regret at leisure. If you’ve chosen the old tax regime, make an informed choice and don’t rely entirely on your agent, particularly of Sections 80C and 80D.

 

Section 80C

Before you begin, note that your employee provident fund (EPF) would make up a majority of the Section 80C deduction. Take that into account before investing more in section 80C. Section 80 reduces taxable income up to Rs 1.5 lakh per financial year for an individual or Hindu undivided family. Familiarize yourself with the various instruments eligible for deduction under Section 80C before investing. These include contributions to the Public Provident Fund (PPF), equity-linked saving schemes (ELSS), national savings certificates (NSC), tax-saving fixed deposits and life insurance.

 

Lock-in period

Pay attention to the lock-in period. Various instruments under this section are linked with a requirement for a lock-in period. Premature withdrawal can lead to forfeiture of tax benefits claimed under Section 80C. The popular option of tax-saving fixed deposits comes with a lock-in period of five years, ELSS with three years, and PPF with 15 years.

 

Tax savings

Don’t focus on tax-saving alone. Priorities investments that align with your overall financial goals. Diversify your portfolio across different asset classes and factor in inflation to ensure long-term growth.

Pay attention to the taxability of returns on such investments. Understand the tax implications of the returns you earn before investing. For instance, interest income earned on fixed deposits is taxable, whereas interest income from PPF is not taxable.

 

Health insurance

Taxpayers can claim deductions on premiums paid towards health insurance for themselves, family members, and dependent parents. This reduces their taxable income. There by lowering their overall tax liability. Section 80D allows deductions with respect to the amount paid for the health insurance policy, preventive health check-ups, and contributions to CGHS, and expenditures on medical treatment.

A maximum of Rs 1, 00,000 can be claimed as a deduction under this provision, depending upon the age of the insured.

 

Medical treatment

Medical expenses for senior citizens can be cited for saving tax. If any expenditure is incurred on the medical treatment of a senior citizen who is not covered under any health insurance scheme, such expenditure is allowed as a deduction under this section. The deduction is allowed to an individual on medical expenditure incurred for himself, his spouse, dependent children, or his parents. The maximum deduction amount is Rs 50,000 for medical expenditures.

 

Preventive health check-ups

Amount paid by a person for the preventive health check-up is allowed as a deduction, for herself, her spouse, dependent children, or her parents. A deduction of Rs 5000 can be claimed for the preventive health check-up of the above-mentioned persons. This deduction will be within the overall limit of Rs 25000 or Rs 50000 as the case may be.

 

Should you pay in cash ?

The health insurance premium is not to be paid in cash. The tax benefit of exemption is available only if the premium is paid in any mode other than cash. However, this doesn’t apply to preventive health check-ups.

Assess your healthcare needs and select a health insurance plan with comprehensive coverage. Explore family floater plans for economical coverage options.

Keep all receipts and documents related to the health insurance premium payments and preventive health check-ups to claim these deductions. Finally, don’t forget that deduction under Sections 80C or 80D is available only if the taxpayer opts for the old tax regime.

For More Details: Pooja Manoj Gupta, visit www.giia26.com
Email: pmgiia26.com Mobile  9868944340