Income Tax Saving: The month of January is also very important for salaried employees. Actually, this is an opportunity to submit the documents of investments made to save tax in the respective financial year. At the beginning of every financial year i.e. in April, companies ask their employees to declare the proposed investment. Also, you also have to tell which tax regime you have to choose – old tax system or easy new tax regime
Income Tax Saving:Â The month of January is also very important for salaried employees. Actually, this is an opportunity to submit the documents of investments made to save tax in the respective financial year. At the beginning of every financial year i.e. in April, companies ask their employees to declare the proposed investment. Also, you also have to tell which tax regime you have to choose – old tax system or easy new tax regime.
According to the data of the Finance Ministry, in the financial year 2023-24, 72 percent of taxpayers have already opted for the new tax regime. However, instead of doing tax planning at the last minute, the process should start from April itself. However, many people do the same thing every year. Sudhir Kaushik, co-founder of tax consultancy firm TaxSpanner.com, said, “To make the most of the tax benefits, taxpayers should plan in advance. While the government is promoting the new tax regime, it is also true that the old structure promotes the discipline of saving and thus plays an important role in goal-based planning of taxpayers.
We are telling you about 5 tax saving options, which will help you achieve your financial goals:
NPS
Private sector employees who contribute 10 per cent of their basic salary and DA to the National Pension System (NPS) can avail the deduction under section 80 CCD (1) of the Income Tax Act under the old regime. Apart from this, under NPS, you can get tax exemption under section 80 CCD (1B).
PF, Home Loan Principal
Despite the increase in financial literacy, many employees take investment decisions at the last moment. The decision to invest in the limit of Rs 1.5 lakh without thinking can prove to be costly. Under this, you will invest in such instruments which will not have liquidity before maturity. For example, the lock-in period of Equity Linked Saving Scheme (ELSS) is 3 years. Kaushik said, ‘Under this section, there is a provision of tax exemption on the contribution of Provident Fund (PF) of employees. Also, this facility is available on payment of principal amount of home loan. Despite this, many taxpayers ignore it.’
Child’s tuition fees
To avail tax exemption on tuition fees, you just need to keep a copy of the children’s fees safe. Under Section 80C, you can avail deduction of up to Rs 1.5 lakh per annum on school/college fees for 2 children. Apart from this, if tuition fees of Rs 2.5 lakh have been paid, then the wife can claim tax exemption of Rs 1.5 lakh and the husband can claim tax exemption of Rs 1 lakh.
Medical expenses for senior citizens
Under Section 80D, senior citizen health insurance premium and medical expenses during a financial year can be declared as deduction of up to Rs 50,000. Also, if their children also spend this amount, they can also claim exemption.
Tax saving with the help of employer
You can reduce your tax liability through reimbursement, salary restructuring. For example, if the employer provides a car to the employee for personal or official use, then it is taxed at a cheaper rate.
Choose tax regime carefully
Most employers do not allow you to choose tax regime during the respective financial year. Usually, this decision works only in April. However, you can change this option in July while filing returns.
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