Best Tax-Saving Tips: Best Ways to Save Income Tax for FY 2024-25

The Budget 2020 brought in a slew of new provisions including the reorganized tax slabs and a considerable reduction in applicable tax rates. Also, depending on the investment and income of the taxpayer, he can choose the suitable tax scheme, whether old or new.It is also important to note that salaried employees and pensioners have the flexibility to choose tax regimes every year. However, people who have business income are not entitled to do so.

Subject to your choice of the tax scheme, you can maximize your tax savings in the following ways.

• Your total income
• Deductions you are eligible for, and
• Your tax liability

1. Invest in Equity-Linked Saving Scheme (ELSS) These are mutual funds that offer multiple benefits in addition to tax deductions under section 80C . Investments made into ELSS up to Rs 1.5 lakh in a year can be deducted from your taxable salary under the relevant section.Moreover, being an equity-based fund, the gains up to Rs 1,00,000 in a financial year from ELSS mutual funds are exempted from tax. While there are a few other instruments as well that can be used for claiming deductions under section 80C, ELSS has the lowest lock-in period of 3 years amongst all.
2. Invest in the National Pension Scheme In addition to Rs.1,50,000 deduction available under section 80CCD(1), Rs. 50,000 more can be claimed as deduction under Section 80CCD(1B) if you invest in Link NPS. Furthermore, if you're a salaried employee and your employer contributes some amount towards NPS, you can claim deduction under section 80 CCD(2) for the amount contributed. However, this deduction is available up to 10% of basic salary + Dearness allowance.Importantly, the deduction available under section 80CCD(2) is available even if you opt for the new tax scheme.{A50DBD9D-B391-49C3-AABC-08ED0996FD22}
3. Invest in Sukanya Samriddhi Yojna This investment promises fixed returns which are tax-free. Also, the maturity amount and principal are not taxable. However, the amount invested is locked in until your daughter turns 21 years of age. The scheme is a great way of saving tax if you have a daughter.
4. Know When to Opt for the New Tax Regime One of the first decisions that you will have to pay while paying tax is choosing a tax regime that is most beneficial for you. This would depend on a few factors such as;
5. Tax Saving can be maximized in FY 2020-21 if you choose the tax scheme carefully after analyses of your income and investment. While, in the old scheme, you have the leverage to take exemptions, the new scheme gives you lower tax rates.

While you can file your tax returns by yourself, there are many provisions that you may miss out on. Consulting a tax and financial expert can help you plan your taxes better for optimum utilization of benefits under income tax act.Ready to make the most of your money? Start your tax planning journey now!

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.