Tips To Save Money On Income Tax And Stay On Course For 2024

As we are on the brink of 2024, it would be wise to find out strategic ways to save money on income tax, to be on a firm footing in 2024. Read on to find more
Save Money On Income Tax
Save Money On Income Tax

As the year 2023 draws to a close, it is time for taxpayers to leverage strategic maneuvers and investments to optimize tax liabilities and save money for 2024.

After the Budget 2023, there are several changes introduced under the new tax regime. So, it is important to understand the tax regimes and pick the most suitable one for you. 

New Tax Regime

“Individuals earning up to Rs 7 lakh in the new tax regime get a rebate under section 87A. Additionally, the standard deduction of Rs 50,000 now applies to both salaried individuals and pensioners.

Essentially, those earning up to Rs 7.5 lakh annually face no tax burden in this new regime, offering potential tax savings,” says Abhishek Soni, CEO, Tax2Win, an income tax portal. 

Maximize Deductions

Explore avenues for deductions like housing rent allowance (HRA), charitable contributions, and investments under Section 80C (Senior Citizen Savings Scheme, Public Provident Fund (PPF), National Pension Scheme (NPS), etc.).

These deductions are allowed under the old regime only.

Tax Loss Harvesting

Sell investments at a loss to offset gains, but be mindful of the "wash sale rule." If you wish to retain the asset, wait for over 30 days to repurchase it.

Charitable Donations

Plan donations carefully to ensure deductions in the intended tax year. Check timelines with financial institutions for effective donations. These deductions are allowed under the old tax regime only.

Utilize Tax-Saving Investments

“Consider government schemes offering high returns with tax waivers like PPF,  Senior Citizen Savings Scheme (SCSS), Sukanya Samriddhi Yojana (SSY), and NPS, providing deductions up to Rs 1.5 lakh under Section 80C.

These deductions are allowed under the old tax regime only,” says Soni. 

Life Insurance Plans

Invest in life insurance plans for tax benefits under Section 80C (premium payments) and Section 10(10D) (maturity or death benefits).

Check premium limitations based on policy purchase dates. These deductions are allowed under the old tax regime only.

Pension Funds And Annuity Payments

“Certain pension funds under Section 80CCC and 80CCD(1) qualify for exemptions up to Rs 1.5 lakh. Section 80CCD(1B) gives an additional deduction of Rs 50 thousand on NPS contributions.

Under the new tax regime, deduction under section 80CCD(2) is allowed,” adds Soni. 

Explore Section 80C Options

Look into various investments and expenses under Section 80C to claim deductions up to Rs 1.5 lakh in a financial year.

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