Your tax-saving action plan for 2025

Here's what you need to know if you want to save on taxes. Most tax deductions are only available under the old tax regime. If you've opted for the new tax regime, you won't be able to claim most exemptions or deductions, including those under Section 80C. This makes it even more crucial for those sticking with the old tax regime to approach their tax-planning exercise wisely, as it allows you to maximise deductions and exemptions. This guide will help you navigate those key deductions available to reduce your taxable income effectively. But before diving into investment choices, it's essential to understand how your income tax is calculated. This knowledge will help you make informed financial decisions. Remember that many tax-saving investments and expenditures under the old tax regime come with lock-in periods or substantial commitments. Rushing into decisions as the financial year ends could lead to poor returns and derail your broader financial goals. That's why it's important to plan ahead. Looking at the bigger picture While tax savings are important, they shouldn't be your only focus. Think of tax benefits as bonuses that come with sound financial planning. Your primary goal should be building a strong financial plan that supports your future dreams. In the following sections, we'll help you calculate your income tax and identify investments that optimise your tax savings under the old tax regime. How to calculate your income tax To know your taxable income, you need to first take a sum of your income from all sources. Many of us have just one source of income - salary. But others can have multiple sources like income from property or business or capital gains, etc. Overall, there are five such categories: Salary House property Profits and gains from business or profession Capital gains Sources other than the ones mentioned above, such as interest income from bank deposits, income from lottery, etc. Once you have combined the income from all sources, you arrive at your gross taxable income. From the gross taxable income, you deduct your tax-saving investments and expenditures. These fall under many categories, as described in tables '80C tax-saving options' and 'Tax-saving expenditures'. What you are left with now is your taxable income. Note that the interest from a savings bank account beyond Rs 10,000 is taxable as per your tax slab. Check the