10 Best Ways to Save Income Tax for FY 2024-25

In India, saving income tax is not just about reducing your tax burden, but also about enhancing your financial portfolio. However, it’s not as simple as investing in any tax-saving scheme. You need to carefully evaluate your financial requirements, understand your risk appetite, and consider your investment timelines before choosing the most appropriate tax-saving options. Tailoring these investments to align with your unique financial situation is crucial.

Here are 10 best ways to save income tax for FY 2024-25:

1. Public Provident Fund (PPF): PPF is a popular tax-saving investment option in India. It offers a fixed interest rate and is backed by the government. You can invest up to Rs. 1.5 lakh per year in PPF and enjoy tax benefits under Section 80C.
2. Employee Provident Fund (EPF): EPF is a retirement savings scheme for salaried employees. You can invest up to 12% of your basic salary in EPF and enjoy tax benefits under Section 80C.
3. National Pension System (NPS): NPS is a pension scheme for Indian citizens. You can invest up to Rs. 2 lakh per year in NPS and enjoy tax benefits under Section 80CCD(1).
4. Equity-Linked Savings Scheme (ELSS): ELSS is a mutual fund scheme that invests in equity and equity-related instruments. You can invest up to Rs. 1.5 lakh per year in ELSS and enjoy tax benefits under Section 80C.
5. National Savings Certificate (NSC): NSC is a government-backed savings scheme that offers a fixed interest rate. You can invest up to Rs. 1.5 lakh per year in NSC and enjoy tax benefits under Section 80C.
6. Senior Citizens Savings Scheme (SCSS): SCSS is a savings scheme for senior citizens aged 60 years and above. You can invest up to Rs. 15 lakh in SCSS and enjoy tax benefits under Section 80C.
7. Life Insurance Premium: You can invest in life insurance premiums and enjoy tax benefits under Section 80C. The premium amount should not exceed 10% of the sum assured.
8. Home Loan Principal Repayment: You can claim tax benefits on the principal repayment of your home loan under Section 80C. The maximum amount you can claim is Rs. 1.5 lakh per year.
9. Interest on Education Loan: You can claim tax benefits on the interest paid on an education loan under Section 80E. There is no upper limit on the amount you can claim.
10. Medical Insurance Premium: You can claim tax benefits on the premium paid for medical insurance under Section 80D. The maximum amount you can claim is Rs. 25,000 per year for self and Rs. 50,000 per year for parents.

Remember, the key to saving income tax is to choose the right tax-saving options that align with your financial goals and risk appetite. Always consult a financial advisor before making any investment decisions.

FAQs:

1. What is the maximum amount I can invest in tax-saving schemes?

• The maximum amount you can invest in tax-saving schemes depends on the scheme. For example, you can invest up to Rs. 1.5 lakh per year in PPF, ELSS, and NSC.

2. Can I claim tax benefits on my home loan principal repayment?

• Yes, you can claim tax benefits on the principal repayment of your home loan under Section 80C. The maximum amount you can claim is Rs. 1.5 lakh per year.

3. What is the maximum amount I can claim on medical insurance premium?

• You can claim tax benefits on the premium paid for medical insurance under Section 80D. The maximum amount you can claim is Rs. 25,000 per year for self and Rs. 50,000 per year for parents.