For the last few years, India is making its presence remarkable at the global front; mainly seems staying stable when the entire world is expected to facing issues of economic slowdown. Even with the stability during the possible slow-down, some people are still looking for some of the best ways to stay secure and financial stable. There is no denying the fact that India is hugely dependent on the tax revenue from the direct tax and the corporate tax – mainly to meet its long-term and short-term expenditures. There are varied services that seems to be stopped or in trouble, if the tax collection becomes short.
It can be a concern for the government, but the reality is that individual taxpayers in the country encompass a small category, even beyond what one thinks about it. And the fact is that these individual taxpayers are crucial pillars of the economy and of course financial backbone of the country. It is crucial to understand the tax payers according to the Income Tax Act – that has provided higher tax saving measures in the form of exemptions and deductions – available on specific investment and expenses incurred by them for the duration of financial year.
Talking about the old tax regime, it has amazing to save more; while it can be used to reduce the ultimate tax burden of the taxpayers.
Before you try to save on tax, it will be better to know about the old and new tax regime. In the year 2020, the government of India introduced a new tax regime – targeted to provide a simplified measure of tax consumption and tax filing. According to this new regime, the taxpayers have reduced saving options in comparison to the old regime. According to experts, the applicable tax rates are lower in comparison to the old tax regime.
Under the new one, you will get some amazing deductions and exemptions like:
- Standard Deduction of Rs, 50,000 on the salary
- LTA (Leave Travel Allowance) and HRA (House Rent Allowance)
- Children’s education allowance and Interest on housing loan
- Deduction under section 80C and Deduction regarding the professional tax payment
- Deduction for payment of medical insurance premium and Deduction for investment in NPS, ELSS, PPF, etc
Old tax regime has some of the options for tax saving that are still available under the old one like deduction under Section 80C – the maximum deduction under the section is Rs 1,50,000. You can save more through investments in Tax saving FDs, PFF, NSC, Senior Citizen Saving Schemes, Sukanya Samridhi Yojna and different other options. You can also save through payment for children’s education, home loan principal payment, life insurance premium payment and through varied other options. Deduction under Section 80D or Medical Insurance Premium is still an option.
Apart from the aforementioned options, you can also try some other ways to save more. Here are the details of new tax regime to save more:
Deduction under section 80CCD (investment in NPS) – You can invest in Nation Pension Scheme – that is a government-backed scheme providing easy retirement solutions to the citizens. Maximum investment up to 150,000 is eligible for the deduction in any financial year. This section also provides additional deduction of 50,000 provided the taxpayer, who meets all the eligibility criteria set.
Deduction under section 80E (interest on education loan) – It is another option through loan taken for self education, for spouse, or children.
Deduction under section EE, Section 80EEA (interest on home loan) – According to this section, you will be qualify for a deduction of a maximum amount of Rs 50,000 and Rs 150,000.
Deduction for interest paid on home loan under section 24 – This section provides for deduction on the interest paid towards the home loan in any financial year. The maximum deduction under the section is restricted up to INR 200,000.
Deduction for a contribution towards any charities under section 80G and Deduction for contribution to any political party are other options. You are advised to consult with your financial advisor or stay in touch with the accountant. Don’t forget to note that February 2023 is a special month that will surely bring to you some changes.
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