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6 Ways to Save on Your Income Tax in 2024-25

by Ashiana / / 5801 views/ Reading Time: 4 minutes

Income Tax saving is an essential aspect of personal finance that many overlook until the last minute. However, with careful planning and a clear understanding of the available tax-saving instruments, you can reduce your tax burden significantly. In 2024, various tax-saving options are available that not only help you minimize taxes but also offer long-term benefits for your financial growth. By making informed choices and investing wisely, you can keep more of your hard-earned money while planning for the future.

6 Ways to Save on Your Income Tax in 2024-25

Understanding Income Tax


Income tax is a tax levied by the government on the income earned by individuals, businesses, and other entities. In India, income tax is imposed on a sliding scale, meaning that the more you earn, the higher percentage you pay in taxes. The income tax system is progressive, where individuals are taxed based on their annual income, with different rates applied to different income slabs.

Taxpayers can reduce their taxable income by using various exemptions, deductions, and rebates as per the Income Tax Act. This includes investing in tax-saving instruments, paying for health insurance premiums, and claiming deductions for home loans, education loans, and more. The goal of tax planning is to minimize your taxable income in a way that complies with the law while maximizing your savings.

Ways to Save on Your Income Tax


Paying taxes is an essential civic responsibility, but with careful planning, you can significantly reduce the amount you owe. Tax-saving strategies allow individuals to minimize their tax burden legally while also making smart financial choices for the future. Let’s explore some of the most effective ways to save on your income tax.

1. Invest in Tax-Saving Instruments (Section 80C) 


One of the most popular and effective ways to save taxes is by investing in instruments that fall under Section 80C. This section offers deductions of up to ₹1.5 lakh for investments in various instruments like:

  • Public Provident Fund (PPF): A government-backed savings scheme with a fixed interest rate, providing both tax benefits and long-term savings.
  • National Savings Certificates (NSC): A secure investment offering a fixed return and tax-saving benefit under Section 80C.
  • Tax-Saving Fixed Deposits: These are term deposits offered by banks with a lock-in period, allowing you to claim deductions on the amount invested.
  • Life Insurance Premiums: Paying premiums for life insurance policies can also help reduce your taxable income.

These investments not only help reduce taxes but also ensure your financial security for the future. Additionally, they provide the benefit of compounding returns, making them a win-win choice.

2. Maximize Deductions under Section 80D (Health Insurance) 


The importance of health insurance has never been more apparent, especially in uncertain times. Under Section 80D, you can claim deductions for premiums paid for health insurance for yourself, your family, and your parents. Here’s how it works:

  • For self, spouse, and children medical insurance, you can claim up to ₹25,000.
  • For senior citizens medical insurance (above 60 years), the deduction limit increases to ₹50,000.
  • An additional deduction of up to ₹50,000 is available for premiums paid for health insurance for your parents, making it a valuable strategy to save both on taxes and safeguard your health.

This dual benefit of tax saving and health security makes health insurance premiums one of the most overlooked but effective ways to reduce income tax.

3. Home Loan Interest (Section 24) 


If you have a home loan, you are in luck. Under Section 24 of the Income Tax Act, you can claim a deduction of up to ₹2 lakh on the interest paid on your home loan. This is a significant benefit, especially if you have just bought a new home or are in the process of repaying a loan. For individuals with large loan amounts, this deduction can lead to substantial tax savings.

In addition to the interest deduction, if you qualify for the principal repayment benefit under Section 80C, it further enhances your tax savings, offering a comprehensive approach to reducing tax through home ownership.

4. Claim Deductions for Education Loans (Section 80E) 


Education is an investment in the future, and the government recognizes this. Under Section 80E, you can claim a tax deduction for the interest paid on an education loan taken for higher education. This deduction applies to loans taken for yourself, your spouse, or children. Importantly, there is no upper limit to the amount of interest that can be claimed under this section.

This makes education loans not only a tool for personal and professional growth but also a way to save on taxes, particularly in the early years when the interest payments are usually the highest.

5. Invest in the National Pension Scheme (NPS) 


Planning for retirement is essential, and NPS provides an excellent opportunity to save taxes while securing your future. Under Section 80CCD(1B), you can invest up to ₹50,000 in the NPS over and above the ₹1.5 lakh limit provided under Section 80C.

This additional contribution makes NPS a great way to reduce taxable income. Moreover, NPS offers the dual benefit of tax deduction and long-term retirement savings. The scheme allows for equity investment and offers the potential for higher returns compared to other retirement instruments.

6. Save Tax on Long-Term Capital Gains 


If you’re an investor in equities, mutual funds, or property, it’s worth understanding the concept of Long-Term Capital Gains (LTCG) tax. When you hold an investment for more than one year, the profits from its sale are subject to LTCG tax. However, there are certain exemptions that you can use:

  • For equities and equity mutual funds, LTCG exceeding ₹1 lakh is taxed at 10%, but gains up to ₹1 lakh are exempt.
  • Real estate also offers similar benefits if held for over two years, with exemptions and reduced tax rates available on long-term capital gains.

By holding your investments for the long term, you not only benefit from compounding but also from significant tax exemptions on your capital gains.

Also read: Tax Benefits on Real Estate Investment: Maximise Your Savings

Conclusion


Income tax planning doesn’t have to be overwhelming. With the right strategies, you can significantly reduce your tax burden in 2024. Focus on investing in tax-saving instruments like PPF and NSC, taking advantage of deductions for home loans and health insurance, and making smart moves with long-term investments like NPS and education loans. Each of these strategies helps you optimize your finances and secure your future. Start planning today to make the most of your tax-saving opportunities!
Tags: real estate, ashiana housing,
Category: Real Estate, Investment,

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Q1.What is the new tax regime of 2024?

In Budget 2024, the tax slabs for the new regime was revised as follows: Rs. 0 to Rs. 3,00,000 – 0%, Rs. 3,00,001 to Rs. 7,00,000 – 5%, Rs. 7,00,001 to Rs. 10,00,000 – 10%, Rs. 10,00,001 to Rs. 12,00,000 – 15%, Rs. 12,00,001 to Rs. 15,00,000 – 20% and Above Rs. 15,00,001 – 30%.

Sukanya Samriddhi Yojana (SSY)

Just like PPF, the Sukanya Samriddhi Yojana account also has EEE tax status. Hence, the amount invested, interest earned and the maturity amount are exempted from tax. The SSY also comes with a sovereign guarantee.

  • Buy a Home Loan and Enjoy Tax Benefits Under Section 80C.
  • Buy a Health Insurance Policy.
  • Park Your Money In Government Schemes.
  • Buy Life Insurance Plans.
  • Investment Options Under Section 80C.

About The Author

Ashiana, Ashiana Housing build homes. Homes surrounded by vast green spaces and fresh breeze. Homes cocooned in secured gated complexes. Homes where futures are forged and there are opportunities to grow. And Homes in environments brimming with healthy activity, trust and respect. At heart, we build communities with care.

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