The final call to lower tax outgo this financial year

No one likes a "we-told-you-so" smartypant. So, we'll avoid saying that the best time to start tax-saving investments isn't when the financial year is concluding but rather at the beginning of the financial year. Oops, while we just brought some boomer energy here, let's quickly move on to the matter at hand: How to save tax at the last minute! What you must know If you have opted for the old tax regime (not the new one), you can reduce your taxable income by up to Rs 1.5 lakh, all thanks to Section 80C of the Income Tax Act. For instance, if you earn Rs 12 lakh annually, you can invest Rs 1.5 lakh in Section 80C investments, reducing your taxable income to Rs 10.5 lakh. So, what are these 80C instruments? Employees' Provident Fund: Your contribution to EPF - and not the employer's contribution - falls under Section 80C. So, if your EPF contribution is Rs 50,000 for the year, you still have another Rs 1 lakh to put in other tax-saving instruments to lower your taxable income. (Just a reminder, you can invest as much as Rs 1.5 lakh under Section 80C). Life insurance: While buying insurance isn't an investment, it is imperative to get one if you have financial dependents. It's best to avoid endowment insurance plans or unit-linked insurance plans (ULIPs), as they fail to offer adequate insurance coverage or satisfactory returns. Always opt for term insurance plans . While these policies lack survival benefits, they provide substantial coverage at a reasonable cost. Health insurance: By the way, buying a health cover can also help you reduce your taxable income. But this doesn't fall under Section 80C. It falls under Section 80D . Section 80D allows a deduction of up to Rs 25,000 (Rs 50,000 if any of the policyholders is a senior citizen) on premiums paid for a health insurance policy towards self, spouse and kids. Further, one can claim an additional deduction of a similar amount for the premium paid towards the health insurance policy of

This article was originally published on March 27, 2024.