New Delhi: The fiscal year 2024-25 is drawing to a close, and if you haven't yet planned your tax savings, time is running out. March 31, 2024, is the deadline after which you will not be able to avail tax deductions for the fiscal year.
Under the Income Tax Act, taxpayers have the opportunity to avail deductions by investing in several investment options. If you wish to invest your hard-earned money in tax-saving schemes, now is the time.
Why is investing before March 31st crucial for tax savings?
Taxpayers opting for the old tax regime under the Income Tax Act can claim deductions through investments. Timely investments not only provide tax relief but also ensure financial security for the future.
Best Tax Saving Options:
Public Provident Fund (PPF):
This is the most reliable option for safe and long-term investment. Currently, it offers 7.1% interest. This scheme provides a deduction of up to ₹1.5 lakh under Section 80C of the Income Tax Act. Being government-guaranteed, it's a risk-free investment and ideal for long-term wealth creation with a 15-year lock-in period.
National Pension System (NPS):
NPS is an excellent option for retirement planning and tax saving. Investing in it offers a deduction of ₹1.5 lakh under Section 80C and an additional ₹50,000 under Section 80CCD(1B), allowing you to save tax up to ₹2 lakh in total. Investments can start with a minimum of ₹1,000 per month, and any Indian citizen aged 18 to 65 can open an account.
Sukanya Samriddhi Yojana (SSY):
This scheme is considered an excellent option for both the security of a daughter and tax savings. It offers an interest rate of 8.2% and an annual tax deduction of up to ₹1.5 lakh. This 21-year scheme allows partial withdrawals when the daughter turns 18.
Senior Citizens Savings Scheme (SCSS):
For senior citizens, this scheme is one of the safest tax-saving options. This scheme offers an 8.2% annual interest rate, and a maximum investment of ₹1.5 lakh is allowed. It also provides tax deductions under Section 80C.
Equity Linked Savings Scheme (ELSS):
This is the only mutual fund scheme that offers a tax deduction of up to ₹1.5 lakh under Section 80C. Compared to other schemes, it has a lock-in period of only 3 years. Its link to the stock market offers potentially higher returns, making it a b option for long-term wealth growth.
Health Insurance:
Tax benefits can also be availed by taking health insurance. Under Section 80D, a tax deduction of up to ₹25,000 for self, spouse, and children, and up to ₹50,000 for parents (if senior citizens) is available.
Other Tax Saving Options:
Tax Saving Fixed Deposits (Tax Saving FD) have a 5-year lock-in period and offer deductions under Section 80C. Unit Linked Insurance Plans (ULIP) offer the benefits of both insurance and investment, while the Employees' Provident Fund (EPF) is considered an excellent tax-saving scheme for salaried individuals.
