Tax saving tips: This is that time of the year when most of the individual taxpayers must have completed their tax-saving investments, already submitted the investment proof to their employer before the due date, and now might be waiting for their March salaries to be credited to their bank accounts without any extra tax cut.
However, if someone hasn’t finished one’s tax-saving task yet, then it is time to hurry up as the tax-saving investment deadline is just a couple of days away.
Tax experts say that 31st March is the last date to make investments to save taxes for FY 2023-24. One can utilize the remaining time wisely to leverage tax-saving options under sections 80C, 80CCD(1), 80D etc.
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For this one needs to explore avenues such as investing in ELSS, PPF, or purchasing health insurance to optimize your tax savings before the deadline. You can also maximize your tax savings by exploring last-minute deductions such as contributing to retirement accounts, making charitable donations etc. We can look into options like investing in National Pension System (NPS), Sukanya Samriddhi Yojana (SSY) for your daughter’s future. Each provides an opportunity to optimize your tax savings effectively before the deadline. Also, always do compare the tax in the new tax regime and the old regime, and choose accordingly.
You can put money in NSC, PPF and SSS which are basically debt products with pre-declared interest payable on them. If you have not availed exclusive deduction under section 80CCD(1B) yet or you have already exhausted 80C, you should put up to 50,000/- before 31st March to get this exclusive benefit.
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It may be noted that deductions under Chapter VI A have continued to be enjoyed by those assessees optiong for the old tax regime for FY2023-24. As the current financial year comes to an end, following last-minute advisory applies to tax payers for saving tax under the old tax regime.
Another expert says that Payments to LIC premium, post office investments, PPF, Sukanya Deposit Scheme etc are eligible for deduction from income upto Rs 150,000 under section 80C. Payments upto Rs 50,000 in NPS are entitled to deduction under section 80CCD. Similarly, payment of mediclaim policy premium upto Rs 25,000 under section 80D is also available for assessees. In case of senior citizens of 60 years and above, the limit for deduction is Rs 50,000.
Apart from the above, section 80TTA/80TTB deduction is available for bank interest up to Rs 10,000/ Rs 50,000 earned upto 31.03.2024, while section 80G deduction relates to claim for charity payments at 50%/100% as notified. The total claim, however, is restricted to 10% of total income for FY2023-24, Khanna adds.
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Generally, we talk about tax-saving options to plan the taxes. It is, however, important to note that interest on tax is also a hidden expense and generally unnoticeable at the time to filing of returns. This interest is applicable when a taxpayer fails to pay adequate advance tax. Hence, before 31st March 2024, the time is right to conduct a high end 360-degree assessment of one’s tax liability and pay sufficient advance tax.
For this, one has to gather all of one’s income documents – salary slips, interest certificates, freelancing income proofs, receipts in the bank account, etc; apart from getting a clear picture of the total taxable income and knowing one’s tax liability from online tax calculators or consulting a financial advisor. One also needs to determine the TDS already deducted or the tax already paid.
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Thereafter one should pay the deficit advance tax. This would save interest @1% per month from April onwards. The individuals should also re-examine whether they have utilised tax exemption limit under various Section like 80C, 80CCD (1B) and 80D, among others. In case, if there is a scope, they may invest even at a fag end of the financial year.
HNIs who are socially inclined may take the opportunity to donate to designated charitable institutions under Section 80G and claim upto 100% deductions before 31st March 2024.
It is to be noted that most banks and financial institutions remain functional on March 31, even if it is a Sunday.
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Where not to invest?
Before investing your hard-earned money, you also need to take some precautions and avoid investing in a product just for tax saving.
For instance, if you haven’t yet made full investment for tax planning for the current year, there are a few products you should not touch like life insurance policies, unless you actually need the life cover.
Likewise, you should not put lump sum in ELSS because it is basically an equity product which is very volatile. You should plan to start investing in ELSS from the next year through the SIP mode to avoid large volatility.
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