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As fiscal year 2024-25 comes to end, here are some last-minute tax saving tips
These measures are available for a Hindu Undivided Family (HUF) as well as individuals, both resident and non-resident, with a combined limit of ₹1,50,000.
With the financial year 2024-25 ending on March 31, 2025, it is important for taxpayers to know that Section 80C of the Income Tax Act can bring down one's gross salary by a maximum of ₹1.5 lakh.
This can be done through investments in tax-saving instruments such as National Savings Certificates (NSC), Public Provident Fund (PPF), life insurance premiums, tax-saving Fixed Deposits (FDs), principal repayment of home loans, equity-linked savings schemes (ELSS), and so on.
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This is available for a Hindu Undivided Family (HUF) as well as individuals, both resident and non-resident, with a combined limit of ₹1,50,000.
Details of these tax saving instruments
1) Provident Fund and Superannuation Fund: These provide multiple benefits such as partial withdrawal and loans against PPF. They are also government-backed offer assured returns, with PPF interest also being exempt from tax.
2) Pension Plans: Investing into a central pension scheme for a fixed period of not less than 3 years can help in saving tax.
3) Equity Linked Savings Scheme (ELSS): Investing into the ELSS of a mutual fund qualifies for tax deduction, though this does come with a 3-year lock-in period and can be riskier as they are associated with the stock market.
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4) National Savings Certificate (NSC): NSC investments can be be claimed under Section 80C deductions.
5) 5-year Tax Saver Fixed Deposit: This is a deposit made in any scheduled bank towards tax saver FDs, or a post office time deposit, though the disadvantage here is the minimum investment tenure of 5 years.
6) Senior Citizens Saving Scheme (SCSS) and Sukanya Samriddhi Yojana: These investments can also be claimed as deductions under this section.
7) Life Insurance Premium: Life insurance premiums or contributions to deferred annuity plans for the self, spouse, children, or any member of the HUF can be used to claim deductions.
8) ULIPs (Unit-Linked Insurance Premiums): ULPIS can be used to make deduction claims, but only under certain conditions listed as follows:
- When the premium is below ₹2,50,000 per year, the income remains tax-free up to Rs. 1.5 lakhs.
- The deduction can only be claimed only if the premium paid is up to 10% of the sum assured.
- People with severe disabilities under Section 80U or suffering from specified disease under Section 80DDB can claim a deduction even if the premium paid is up to 15% of the sum assured. Contribution in the name of self, spouse, child, or member of HUF is also eligible for deduction.
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Expenses which qualify for deduction under Section 80C
Expenses such as children’s tuition fee and the principal repayment of housing loans qualify as deductions, though in the former example, it only applies for a maximum of 2 children for any educational institute or level in India and for the latter, the amount paid towards stamp duty and registration can also be claimed as deduction.
