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Tata Capital > Blog > Wealth Services > Last-minute Tax-Saving Solutions for Old Tax Regimes

Wealth Services

Last-minute Tax-Saving Solutions for Old Tax Regimes

Last-minute Tax-Saving Solutions for Old Tax Regimes

As the financial year draws to a close, taxpayers in India are looking for strategic moves to minimise their tax liabilities. For those who have opted for the old tax regime, the pressure is on to explore last-minute tax-saving solutions.

The Income Tax Act features various provisions on specific investments and expenses incurred by an individual that taxpayers can take advantage of and save on tax.

In this article, we will delve into some effective strategies that you can follow to maximise your tax savings under the old tax regime.

1. Deductions under section 80C

Section 80C of the ITA is one of the most popular tax deductions available to taxpayers on certain investments and expenses. The eligible investments include investments in tax-saving bank FDs, PPF, ELSS funds, NSC, Senior Citizen Saving Scheme, and Sukanya Samriddhi Yojna, among others.

Under this section, you can claim deductions of up to Rs. 1.5 lakhs in a financial year. The various expenditures eligible for tax exemption include insurance premiums, home loan principal amount, and education loan payments.

2. National pension scheme

Within the old tax regime, the national pension scheme is an attractive avenue for last-minute tax saving. With NPS investments, you can claim up to Rs. 1,50,000 as a deduction in a financial year.

In addition, section 80CCD(1) allows you to save an additional Rs. 50,000, while section 80CCD(2) provides tax deduction benefits on employers’ contributions to the NPS. This way, you can effectively save up to Rs. 2 lakhs or more on taxable income in a financial year.

3. Charity and donations

Section 80G provides for tax exemptions on any contribution made by the taxpayer to a charitable institution, trust, or relief fund. Taxpayers within the old tax regime can claim 50% or 100% of the donation made as a tax deduction, depending on the nature of the trust, fund, or institution.

However, note that not all types of donations and charities are eligible for tax deductions under section 80G. So, you must verify the eligibility of your charitable contributions if you wish to claim the deductions under this section. Further, this tax benefit is no longer available in the new tax regime.

4. Health insurance

Your health insurance premium is also eligible for tax exemptions under section 80D of the ITA. Under this section, the premium paid towards any health insurance self, spouse, children, or dependant parents is eligible for deduction.

Depending on the age of the taxpayer and the dependant parents, you can claim Rs. 25,000 to Rs. 1,00,000 as tax benefits on the insurance premium paid.

5. this is not last minute solution

Another last-minute tax saving option includes the interest paid on home loans. First-time homebuyers who are eligible as per the provisions of section 80EE and 80EEA, can enjoy tax exemptions of up to Rs. 50,000 and Rs. 1,50,000 on the interest payments on a home loan.

Additionally, although not a last minute tax saving option but, If you have taken an education loan for the higher education of children, spouse, or self, you can also get tax benefits under section 80E under the old tax regime. Under this section, there is no maximum limit to the amount you can claim as deductions on the interest paid on the education loan. This is an excellent tax-saving option, especially for individuals within the higher tax bracket.

Wrapping up

As the financial year comes to an end, careful planning and thorough evaluation of your investments is crucial to maximise tax savings. By exploring these last-minute tax-saving solutions, you can make informed decisions to reduce your tax liability and manage your finances better.

To explore more tax-saving investment opportunities, get in touch with the professionals at Tata Capital Wealth. Explore top securities mutual funds, review your portfolio, and enjoy a suite of other wealth management services.

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