Tax Saving Reminder: The financial year 2025-26 is coming to a close soon. Hence, taxpayers adhering to the old tax regime should take crucial financial actions before March 31st. Timely investments and payments can lead to tax relief. Financial experts recommend completing essential tasks ahead of time to avoid a last-minute rush, as technical difficulties on online platforms may cause transactions to be recorded in the following financial year, resulting in a loss of tax benefits.
There are numerous investment options in the market, but selecting the right one hinges on your risk tolerance and future objectives. Delaying investments can lead to increased tax liabilities and may hinder your ability to gain investment returns by the end of the financial year.
First, verify the 80C limit
Initially, it’s crucial to determine how much of the Rs 1.5 lakh deduction under Section 80C of the Income Tax Act has been utilized. Frequently, contributions like Employee Provident Fund (EPF), life insurance premiums, or children’s tuition fees are already counted towards this limit. If there’s any remaining amount, it can be utilized by investing in approved options before March 31st.
Investing in ELSS offers tax exemption
The Equity Linked Savings Scheme (ELSS) is a favored method for tax savings through mutual funds. A notable aspect of this scheme is its lock-in period of just three years, which is the shortest among other 80C schemes. Additionally, it provides online investment options, making it convenient to invest even at the last moment.
Taxpayers contributing to the National Pension System can also enjoy extra tax benefits. An additional deduction of up to Rs 50,000 can be claimed under Section 80CCD(1B) of the Income Tax Act. This deduction is in addition to the Rs 1.5 lakh limit under Section 80C, offering further opportunities for tax savings.
Life and health insurance coverage
- Life insurance premiums are covered under Section 80C, while health insurance premiums are eligible for additional deduction under Section 80D.
- You can save tax on premiums up to Rs 25,000 for self and family and Rs 50,000 for senior citizen parents.
- This not only saves your taxes but also protects your savings in case of medical emergencies.
You can further reduce your taxable income by taking new insurance or paying premium by March 31.