Income Tax Exemption: The deadline for tax saving investment for the business year 2023-24 is going to end on 31 March 2024. Today we are going to tell you some important things to keep in mind in this regard.
Income tax planning is one of the most important things for financial planning because it helps in increasing your savings by reducing your tax liability. The last date for tax saving investment for the business year 2023-24, 31 March 2024, is now nearing. In such a situation, you should immediately make tax saving investments so that your disposable income can increase. Often people make many mistakes by taking hasty decisions at the last moment, due to which they have to suffer the consequences. We are going to tell you some effective methods of tax planning (Income Tax Tips) to save you from these mistakes and losses.
Calculate income tax liability
Before making tax saving investments, it is important for taxpayers to accurately calculate their tax liabilities. In this, it is important to keep in mind the essential investments eligible for tax deduction or such payments on which tax has to be paid such as EPF contribution, repayment of home loan principal and interest, NPS made from salary. Things like NPS contribution, term insurance and HRA deduction are included in this. This approach with a balanced approach protects you from investing more or less than necessary.
Invest with a long term perspective
Instead of adopting a piecemeal investment approach to save tax, financial advisors recommend taking a long-term view and making investments that are in line with your financial goals. By doing this, you can use your money not only for tax savings but also for your long term financial growth.
Understand the income tax regime
Salaried employees should think carefully whether it will be beneficial for them to adopt the old tax regime or the new tax regime. They should adopt the tax regime as per their financial profile.
To improve tax management, investors should calculate their tax liability under both the systems. After this, only the regime which has less tax should be adopted.
In the Union Budget 2023, the new tax regime has been made the default option in income tax returns, in such a situation, taxpayers need to understand the meaning and purpose of this step of the government and take a decision thoughtfully.
Invest after calculating tax savings
You can reduce your tax liability by investing in tax exempt investment options under the Income Tax Act. This includes investing in ELSS, NPS, ULIP, PPF and the most popular savings schemes with tax deduction under Section 80C. Apart from this, for NPS investment, section 80CCD (1B) and people living in rented houses, who do not get HRA, can get tax exemption under section 80GG.
Make a plan and invest wisely
While investing for tax saving, people often do not pay much attention to the rate of return on their investment. Whereas, the returns on investments like PPF and FD are already determined. Apart from this, for tax planning, there is a need to calculate the returns of volatile investments like ELSS and ULIP more carefully.
Experts believe that before investing, you should calculate whether the investment options adopted by you are going to give higher returns as compared to alternative measures or not.
