How to save taxes for the financial year 2023-24?

Posted on: May 12, 2023 | | Written by:

How to save taxes for the financial year 2023-24?

Published on May 11, 2023. EST READ TIME: 3 minutes

Paying taxes is an essential duty one must fulfil as a responsible citizen. As the financial year 2023-24 begins, it’s time to start planning your taxes to minimise liability and maximise your tax savings. Tax-saving investments can help reduce your taxable income and save money in the long run. There are several tax-saving investments that you can explore, such as the Public Provident Fund (PPF), Equity-Linked Saving Scheme (ELSS), National Pension System (NPS), and more. However, choosing investments that align with your financial goals, risk appetite, and investment horizon in the new financial year is essential.

Ways to save taxes for the financial year 2023-24

Here are some ways to avail tax benefits and reduce the tax burden while filing your income tax returns:

1. Section 80C:

This is the most popular tax-saving option, which can help you avail tax benefits of up to Rs 1.5 lakh in a financial year. Open to individuals and Hindu Undivided Families (HUFs), some of the investment options for tax savings under Section 80C of the Income Tax Act are National Pension Scheme (NPS), Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS), National Savings Certificate (NSC), Senior Citizens Savings Scheme, Bank Fixed Deposits, Sukanya Samriddhi Yojana (SSY), Unit Linked Insurance Plan (ULIP), Life Insurance, etc.

2. Tax saving options other than 80C:

• Section 80E:

You can avail of a tax benefit on interest paid towards an education loan. The loan can be availed for higher studies of self, spouse and children.

• Section 80D:

Section 80D is for premiums paid towards health insurance policies of self, spouse, and children, a taxpayer can claim a deduction of up to Rs 25,000. Senior citizens can claim a maximum deduction of Rs 50,000 per year.

• Section 80DD:

An individual can claim a flat deduction, irrespective of the actual expenses incurred, for the treatment of family members who are disabled and dependent. The amount of deduction, however, depends on the severity of the disability. If the disability is more than 40% but less than 80%, you will get a deduction of Rs 75,000. If the disability is greater than 80%, it is Rs 1,25,000.

• Section 80EE:

First-time home buyers can claim a tax deduction of up to Rs 50,000 on interest paid towards a home loan.

• Section 24(b):

A maximum deduction of Rs 2,00,000 can be claimed on the interest paid towards a home loan which can be taken for the purchase or construction of a new house or renovating/repairing the existing home.

• Section 80GG:

If you reside in a rented property and do not get House Rent Allowance (HRA) from your employer, you are eligible for a tax deduction.

• Section 80G:

Tax benefits can be availed for donating to charitable institutions. However, charitable institutions or trusts must be registered under Section 12A.

• Section 80GGC:

Donations made to political parties or electoral trusts are eligible for tax exemption.

• Section 80U:

A disabled taxpayer can claim a flat deduction based on the severity of the disability and certified by a medical practitioner. If the disability is more than 40% but less than 80%, the maximum deduction is Rs 75,000. If it is more than 80%, the person can claim Rs 1,25,000. Remember, if the disabled himself/herself claims this deduction, no other family member can claim it under Section 80DD.

• Section 80TTA:

Deduction of up to Rs 10,000 can be availed on interest earned on savings account deposits in a bank, post office, and cooperative society.

• Section TTB:

Resident senior citizens can avail maximum tax benefit of Rs 50,000 on interest accrued on deposits.

Conclusion

With so many tax-saving options available for the financial year 2023-24, proper tax planning is essential to save the maximum on taxes while filing your income tax returns. And the best time to plan these tax savings is the beginning of the new financial year. If you have medical insurance, health insurance, or individual health insurance, pay the premium before the new financial year starts to avail of tax benefits.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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