Save More Tax Before Submitting Investment Proof: Do you also have to submit investment proof in your office within the next few days? If after collecting all the documents, you come to know that this time there is some shortcoming in your investment, due to which there is a possibility of more tax being deducted, then what will you do? If something similar is happening to you, then read the things mentioned here carefully before submitting the investment proof. You may still have scope to save some tax under the Income Tax Rules.
Experts Speak
Talking to Outlook Money, Amarpal S. Chadha, Tax Partner and Mobility Leader, EY India said, “Wise investments help in tax saving. Understanding the wide range of tax-saving investments/expenses eligible for tax deductions can help to reduce tax liability. From the financial year 2023-24, the new tax regime is the default tax regime, which has limited deductions/exemptions but lower income-tax slab rates. If one opts for the old regime and if you have not yet made necessary tax savings investments/incurred eligible expenses, time is running out, as 31st March is fast approaching to make necessary investments/incur eligible expenses under section 80C (deduction up to 1.5 lakhs) and various other sections to minimise your tax liability. One can consider avenues like investment in the Public Provident Fund, Equity linked savings scheme, National Pension Scheme, Health insurance policy, 5-year bank fixed deposits, etc. Similarly, there are various expenses which are eligible for tax benefits like children's tuition fees, housing loan principal repayment, etc.”
Bankbazaar.com’s CEO Adhil Shetty said, “Tax deductions under various sections of the Income Tax Act can unlock significant savings for you. From Section 80C offering deductions of up to 1.5 lakh on principal repayment to Section 24(b) granting tax exemption on home loan interest up to Rs 2 lakh per annum, there are ample opportunities to optimize tax liabilities. Moreover, those embarking on property construction journeys can benefit from Section 24(b) if the construction is completed within five years.”
“Additionally, health insurance premium payments can be leveraged for tax deductions under Section 80D, offering further relief. Investing in instruments like SCSS, SSY, NPS, and PPF not only secures financial futures but also qualifies for tax waivers under Section 80C. Furthermore, Section 10(10D) ensures tax-free proceeds from insurance policies. With provisions like Section 80EE enabling deductions on home loan interest exceeding the Section 24 limit and the extension of additional interest eligibility under Section 80EEA for affordable housing, you have ample opportunities to optimise your tax planning. When it comes to documents, ensure all documents are self-attested, with signatures aligned with PAN records. Digital proofs must contain essential details like investor name, PAN, and portfolio value. Physical documents, such as bank FDs, should highlight maturity details. Mutual funds investment receipts should be kept safely for the current financial year to claim deductions. Proof amounts must precisely match claimed deductions. Maintain a file, including purchase invoices and statements, to avoid delay in your tax submission,” Shetty added further.
Tax Professional Sameer Gogia considered tax planning as a crucial aspect of financial management for everyone and particularly for salary class. "It not only helps in reducing the tax burden but also help in maximizing the savings and investments. With a myriad of tax-saving options available, understanding and leveraging them effectively can significantly impact one's financial well-being. With various tax-saving options like PPF, EPF, mutual funds, FDs, health insurance premium, NPS, home loan interest, HRA and many more available to an individual opting for old tax regime, selecting best option to optimize the tax liabilities and enhancing financial security is a difficult choice," Gogia said.
"Considering the current stock market situation, people may contemplate capital gains optimization by offsetting these losses against realized capital gains, thus curbing the net capital gains accrued. Responsible citizens, in their positive contribution toward environment and society may also consider investing in Electric vehicle by availing loan and enabling them to claim tax deductions on the interest component up to INR 1.5 lakh. People with old parents at home may also consider availing additional Deductions up to Rs 50,000 for their senior citizen (employee or parent) provided they have no health insurance policy in effect. Salaried Employees may also explore to utilize their accumulated leave balance for domestic travel along with their dependents to garner tax-free reimbursement of travel cost and start their journey in exploring hidden gems of India's tourism," Gogia added.
Ashish Aggarwal, Director of Acube Ventures told Outlook Money that the first thing to do is to analyze your current eligible investments for the sections that include sections 80C, 80D for health insurance premium payment 80E for education loans and more among others. Some people of low-income status are exploited by the provisions made to them. "As you near the end of the financial year, looking for ways to save more on your tax is very important. The investments made are a good start, but not all. You can use some strategies to decrease the taxable income," he said.
"Look for charitable organizations which offer two kinds of donations namely charitable donations which fall under section 80G and other funds approved under section 80GGA. Modest compulsory works can establish a worthwhile allowance that will lower the amount of income that is taxable. While there are tax return benefits of being a business owner or a professional, don’t forget to claim genuine business expenses. Not only can the quotations of renting a workplace but also the internet and a little part of car maintenance – all such deductible net incomes challenge the small shareholders to the tax policy. To sum up, if you had losses related to capital gains, you could use them to offset the gains to secure the best position. Also, one can make a strategic loss carry forward to be used against the gained income from the future financial year," Aggarwal added further.
Section 80C of the Income Tax Act is the most popular way to save income tax among people filing Income Tax Returns. Under this section, you can save tax on many types of investments including PPF, EPF, life insurance premium, and tax saving bank FD. Under this section, tax exemption is available on investments up to a maximum of Rs 1.5 lakh in a financial year. So if your total investment under this section is less than Rs 1.5 lakh, you can still invest and submit the proof of the same in your office.
Tax deduction on education loan interest
If you have taken an education loan for yourself, your children or your spouse's higher education, then you can also avail tax deduction under Section 80E on the interest paid on it. You can avail of this deduction for a maximum period of 8 years or the actual period of interest payment, whichever is less. The good thing is that there is no maximum limit on the deduction amount under this section. This deduction is available only on the interest of the loan and not on the repayment of the principal amount. So if you have taken an education loan and were not aware of this section till now, then you can save tax by submitting its proof.
Tax benefit on health insurance premium
Tax exemption is available under Section 80C on the premium paid for life insurance, but apart from this, the premium paid for health insurance also gets a separate tax benefit under Section 80D. This benefit is available to people below 60 years of age at a maximum premium of up to Rs 25,000. But for people above 60 years of age, this limit is Rs 50 thousand. This limit applies to health insurance purchased for yourself, your spouse and children. But if a person pays a separate health insurance premium for his parents, then he gets a separate discount. This exemption is also available according to the age of the parents. If the age of the parents is less than 60 years then tax exemption can be availed up to Rs 25 thousand and if the age of the parents is more than 60 years then tax exemption up to Rs 50 thousand can be availed. If a person is above 60 years of age, he can claim tax exemption on health insurance premiums up to Rs 1 lakh for himself and his parents. Apart from this, you can also get tax exemption up to Rs 5000 spent on preventive health checkups of yourself, your spouse, children and parents.
Home loan interest payment
Tax exemption on payment of the principal amount of a home loan is available only within the limit of Rs 1.5 lakh under Section 80C. Whereas, a separate tax exemption is available on repayment of home loan interest up to a maximum of Rs 2 lakh during a financial year. This exemption is available under Section 24B of the Income Tax Act. So if you have also paid interest on a home loan, then do not forget to claim tax exemption on it.
Deduction on savings account interest
If you keep your money in a savings account and you get interest on it, then you can claim tax deduction on it also with a limit of Rs 10,000 in a year. This exemption is available under section 80TTA. Keep in mind that under this section, the benefit of deduction is available only on the interest on the savings account. This is not applicable to FD, recurring deposits or any other time deposit. Senior citizens get tax exemption on interest under a separate section 80TTB, in which the maximum limit is Rs 50 thousand. Not only this, the elderly also get this benefit on the interest received on FD
