Top Income Tax Saving Tips for 2024.
17 Jul 2024 7 mins Tax Planning
Best ways to save on income tax in 2024 with tips like Section 80C deductions, health insurance benefits, home loan interest deductions, and more. Maximize your savings and minimize your tax liability!
1. Utilize Section 80C Deductions fully
Investments and Expenses:
You can claim deductions up to ₹1.5 lakh under Section 80C for investments in Public Provident Fund (PPF), Employees' Provident Fund (EPF), National Savings Certificate (NSC), tax-saving Fixed Deposits, and life insurance premiums.
2. Take Advantage of Section 80D
Health Insurance Premiums:
Premiums paid for health insurance for yourself, your family, and your parents are deductible under Section 80D. The limit is ₹25,000 for yourself and family, and an additional ₹25,000 for parents (₹50,000 if they are senior citizens).
So try to get your entire family under the health insurance security. This is apart from your corporate health insurance.
3. Claim House Rent Allowance (HRA)
- If you live in a rented house, you can claim HRA exemption under Section 10(13A). Ensure you have rent receipts and a rental agreement to substantiate your claim. This is the biggest tax cutter that not many people know.
4. Benefit from Home Loan Interest Deduction
Section 24(b):
Section 24(b) of the Income Tax Act allows you to deduct the interest paid on your home loan. A maximum tax deduction of Rs.2 lakh can be claimed from your gross income yearly for a self-occupied residence, provided the construction/acquisition of the house is completed within five years.
5. Utilize the New Tax Regime's Lower Rates
- The new tax regime offers lower tax rates without exemptions and deductions. Compare your tax liability under both regimes to choose the one that results in lower taxes for you.
6. Claim Deductions under Section 80TTA/80TTB
- Interest on Savings Accounts: Interest earned up to ₹10,000 from savings accounts can be claimed as a deduction under Section 80TTA.
- Interest for Senior Citizens: Senior citizens can claim up to ₹50,000 on interest income from savings and fixed deposits under Section 80TTB.
7. Use Section 80E for Education Loan Interest
- Interest paid on education loans for higher education can be claimed as a deduction under Section 80E. There is no upper limit on the amount you can claim.
- Note - This can only be claimed in the first 8 years from the loan commencement.
8. Invest in the National Pension System (NPS)
- Contributions to NPS qualify for additional deductions of up to ₹50,000 under Section 80CCD(1B), over and above the ₹1.5 lakh limit under Section 80C.
Tax Benefits:
- Under Section 80C: Up to ₹1.5 lakh can be claimed as a deduction.
- Under Section 80CCD(1B): Additional deduction of ₹50,000.
- Under Section 80CCD(2): Employer's NPS contribution (for the benefit of employee) up to 10% of salary (Basic + DA), is deductible from taxable income, up-to 7.5 Lakh
9. Claim Deductions for Donations
- Donations to specified funds and charitable institutions are deductible under Section 80G. Ensure you have the donation receipts and the institution’s PAN.
10. Avail Leave Travel Allowance (LTA)
- LTA is exempt from tax for travel expenses incurred for you and your family within India. This can be claimed twice in a block of four years.
11. Tax Saving through Agricultural Income
- Agricultural income is exempt from tax. If you have any agricultural income, it can help reduce your overall tax liability.
12. Interest on Savings for Senior Citizens
- Senior citizens can avail additional benefits on interest income, reducing their taxable income.
13. Ensure Proper Documentation
- Maintain accurate records and documentation for all your investments, expenses, and claims to avoid any issues during tax assessments.
14. Plan for Future Tax Changes
- Keep an eye on upcoming tax law changes and budget announcements to stay informed and adjust your tax planning strategies accordingly.
FAQs
Q. What is Section 80C, and how can I maximize deductions under it?
A. Section 80C of the Income Tax Act allows you to claim deductions up to ₹1.5 lakh for investments in instruments like PPF, EPF, NSC, tax-saving FDs, and life insurance premiums. To maximize your deductions, invest in a mix of these options based on your financial goals and risk appetite.
Q. How much can I claim under Section 80D for health insurance premiums?
A. Under Section 80D, you can claim a deduction of ₹25,000 for health insurance premiums for yourself, your spouse, and your children. An additional ₹25,000 can be claimed for premiums paid for your parents, which increases to ₹50,000 if your parents are senior citizens.
Q. What is the House Rent Allowance (HRA) exemption, and how can I claim it?
A. HRA exemption under Section 10(13A) can be claimed if you live in a rented house. To claim HRA, you need to provide rent receipts and a rental agreement as proof of payment.
Q. How does Section 24(b) help in tax savings for home loan interest?
A. Section 24(b) allows you to claim a deduction of up to ₹2 lakh per year on the interest paid on your home loan for a self-occupied property. Ensure the construction/acquisition is completed within five years to qualify for this deduction.
Q. Should I opt for the new tax regime or stick with the old one?
A. The new tax regime offers lower tax rates but without exemptions and deductions. Compare your tax liability under both regimes to determine which one is more beneficial based on your income and eligible deductions.
Q. What is the deduction limit under Section 80TTA and 80TTB?
A. Under Section 80TTA, you can claim a deduction of up to ₹10,000 on interest earned from savings accounts. Senior citizens can claim up to ₹50,000 on interest income from savings and fixed deposits under Section 80TTB.
Q. Can I claim deductions on education loan interest?
A. Yes, under Section 80E, you can claim a deduction on the interest paid on education loans for higher education. There is no upper limit on the amount you can claim.
Q. What are the tax benefits of investing in the National Pension System (NPS)?
A. Contributions to NPS are eligible for deductions under Section 80C (up to ₹1.5 lakh), Section 80CCD(1B) (additional ₹50,000), and Section 80CCD(2) (employer's contribution up to 10% of salary, capped at ₹7.5 lakh).
Q. How can I claim deductions for donations under Section 80G?
A. Donations to specified funds and charitable institutions are deductible under Section 80G. Ensure you have the donation receipts and the institution’s PAN to claim this deduction.
Q. What is Leave Travel Allowance (LTA), and how can I claim it?
A. LTA is exempt from tax for travel expenses incurred for you and your family within India. You can claim this exemption twice in a block of four years by providing travel receipts and necessary documentation.
Q. Is agricultural income taxable?
A. Agricultural income is exempt from tax. If you have any agricultural income, it can help reduce your overall tax liability.
Q. What additional benefits are available for senior citizens on interest income?
A. Senior citizens can avail additional benefits on interest income under Section 80TTB, which allows a deduction of up to ₹50,000, reducing their taxable income.
Q. Why is proper documentation important for tax savings?
A. Maintaining accurate records and documentation for all your investments, expenses, and claims is crucial to avoid any issues during tax assessments and to substantiate your deductions.
Q. 14. How can I stay updated on future tax changes?
A. Keep an eye on budget announcements and changes in tax laws to stay informed. Regularly consult with a tax advisor to adjust your tax planning strategies accordingly.
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Author- Ayush Naik
Ayush Naik is an expert in personal finance with an MBA in Finance. With over five years of experience working alongside stock market traders, Ayush has a deep understanding of market dynamics and investment strategies. His practical insights and analytical skills have helped many individuals navigate the complexities of financial planning and investment. Ayush’s professional background and commitment to educating others make him a valuable contributor to our personal finance blog.