Investment

Published: Mar 16, 2023
Updated: Mar 16, 2023

Reduce Your Tax Bill Today: Last-Minute Income Tax Saving Options to Explore

Financial year end is approaching , what are potential tax saving options

The end of the financial year can be a stressful time for taxpayers as they try to find ways to save on their taxes. However, there are several last-minute income tax saving options that you can consider. The first step is to determine how much you need to invest for tax savings. You can claim a deduction of up to ₹1.5 lakhs under Section 80C for investments and expenses such as employee provident funds, life insurance premiums, tuition fees, and home loan principal repayments.

It's crucial to understand the various tax-saving options available and choose the ones that best suit your financial goals and risk appetite. Medical insurance, term insurance, and equity-linked savings schemes (ELSS) are the most commonly used strategies for tax- saving. ELSS mutual funds invest 80% to 100% of their assets in equity shares of companies and have a lock-in period of 3 years. Although ELSS funds carry market risks, they offer better returns than other options.

Apart from ELSS, other tax-saving options include the Public Provident Fund (PPF), National Pension System (NPS), tax-saving fixed deposits, and charitable donations. PPF is a government-backed scheme that offers tax-free investments, interest earned, and withdrawals on maturity. NPS deductions are eligible under Section 80CCD of the Income Tax Act. Tax-saving fixed deposits are suitable for seniors and risk-averse investors, with a tenure of 5 years.

Furthermore, medical insurance with a ₹100,000 Section 80D deduction cap ( ₹50,000 for self and family if senior citizen and ₹50,000 for senior citizen parents) can also help you save on taxes. Interest on home loans is also eligible for a deduction of up to ₹50,000. Lastly, online tax planning tools are available that provide personalized tax-saving reports to their users.

Explore options and gauge the risk involved and benefits to be gained and make a decision accordingly

Take the time to consider your tax-saving options carefully and choose the ones that best fit your financial goals and risk appetite. With these last-minute income tax saving options, you can significantly reduce your tax bill and meet your financial goals.