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Save huge on your taxes for FY 2024-25! Learn all about deductions, exemptions, and more in this series of smart strategies to cut down tax liability. Download the JJ Tax App for expert advice!
The new tax regime that comes into effect on April 1, 2024, for the AY 2025-26, has created a more simplified structure with lesser tax rates. The biggest highlight has been a fixed tax rate without many deductions or exemptions. On that account, it comes as a necessity to assess your finances and stay updated to know how to save on taxes for the FY 2024-25.
Our article will be your cheat sheet on how you can save on taxes. So, read ahead and become wiser on the best tax-saving strategies that will help you retain your income better.
The two benefits of investing in the following schemes are: saving on your taxes while adding on to your wealth. Some of the popular tax-saving investment options include:
Equity-Linked Saving Schemes (ELSS) These are equity mutual funds that get tax benefits under Section 80C of the Income Tax Act. The maximum amount which can be invested which is eligible for deductions, is ₹1.5 Lakh per financial year. This product has a lock-in period of 3 years, and therefore it is great if you want to use this scheme to grow your money in the long run.
Public Provident Fund (PPF): Similar to the ELSS, the Public Provident Fund also provides benefits under Section 80C. Annual investments of up to ₹1.5 Lakh are available for deductions on the amount invested. You also get tax-free interest earnings and a maturity period of 15 years that may help you strengthen your retirement planning options.
National Pension Scheme (NPS): The NPS is a voluntary retirement savings scheme wherein you can avail yourself of tax deductions under Section 80CCD(1B). You can claim tax deduction on investment up to ₹50,000 every financial year. It offers tax-free accumulations and exemption on partial withdrawal from tax.
When a Home Loan is taken, under Section 24 of the Income Tax Act, interest paid can be claimed as a deduction. This applies to both rented and self-occupied properties.
Education Loans: You can avail a deduction if your children are pursuing higher education; the tuition fees you pay is deductible under Section 80C of the Income Tax Act. The maximum permissible deduction limit is ₹1.5 lakh, and this is the overall cap for all investments under Section 80C.
Under the Income Tax Act, there are certain tax-saving exemptions that are relevant to certain sources of income or life events. Some of these include:
Leave Travel Allowance (LTA): The employers provide an LTA and HRA to supplement the basic income that remains tax-free, subject to certain conditions.
Gratuity: Gratuity means a monetary token of appreciation given by an employer at the end of service. The gratuity is usually tax exempt up to a certain level.
Meal Coupons: According to Income tax act, meal coupons up to ₹50 per meal are tax exempted.
Internet or Phone Expenses: Internet or phone expenses incurred during work are often reimbursed by employers. This allows for more savings as they are exempt from taxes.
Exemption on Receiving Compensation on Opting for Voluntary Retirement: Compensation provided by the employer may be given in case of voluntary retirement. Such compensation is exempt from tax under Section 10 (10C) to the extent of lower of the compensation received or ₹5,00,000.
Donations: Donating to charitable organizations or causes does not just provide us good Karma! It also helps us save taxes as such donations are exempt under Section 80G.The deduction may be 100% or 50% depending on certain conditions.
Agricultural Income: The government has exempted income derived from agricultural activities under Section 10(1), to encourage agricultural activities in India.
Life Insurance Maturity Proceeds: Section 10 (10D) covers the exemption of proceeds from a life insurance policy at maturity.
Your investments can prove to be a great source of income while simultaneously curbing tax liabilities. FDs and Debt Mutual Funds attract interest income, which is taxed. On the other hand, Equity Mutual Funds have different tax treatments: Short-Term Capital Gains (STCG) within 1 year are taxed at your applicable income tax slab rate, while Long-Term Capital Gains (LTCG) that surpass 1 year are taxed at 12.5% if the gains are more than ₹1.25 lakh from 23rd july,2024 while for transfer made upto 22nd july,2024, the tax rate is 10%.
Tax treatments vary with the umpteen number of options available to you. For instance, interest earned on National Savings Certificates (NSCs) is subjected to tax, but, interest on Public Provident Fund (PPF) and, Employee Provident Fund is tax-free.
This would put you in good stead to keep pace with new avenues for tax savings. Officially, you need not look very far - the website of the Income Tax Department can be found at for information, and you could always engage a financial advisor to give you an overview of things.
The best tax planning practices are to save money and keep yourself updated on policy changes and new avenues. Stay aware of your income slab, utilize investments, claim deductions, and stay updated about the tax laws. Or download the JJ Tax app. Our expert consultants break down the complex world of taxation to help you understand it easily.
