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Guide to Last-Minute Tax Savings

There are numerous things you must be aware of if you just became a member of the nation’s working class and have no idea how the entire tax system functions. You will be subject to income tax if your yearly salary exceeds Rs. 2,50,000. Like any newbie, it will take some time for you to fully comprehend where you need to spend money in order to make deductions and reduce your tax liability. Continue reading to learn about the last-minute tax-saving investments you may make.

Those who are lethargic in planning their investments throughout the year might utilize the following tools:

80C Investments

The most frequent deductions are 80C investments. The maximum deduction allowed is Rs. 1,50,000 per year. The following are the tools that enable you to claim 80C deductions:

PPF:
Government-sponsored fixed income security programme. The interest rate on your savings is 8.8%. The maximum investment amount is Rs. 1,50,000, and the lock-in duration is 15 years.

Life Insurance Premiums:

You may deduct the cost of the premium under Section 80C if it is for both you and the people who are your dependents.

NSC:

This programme has been specifically created for IT assessments. The investment is not subject to any upper restriction. Also, there is no source deduction for the tax. Additionally, NSC may be maintained as security for bank loans. The interest rate being provided is 8.50%.

FD with 5-Year Tax Savings:

You are not permitted to make any early withdrawals from this FD since it has a 5-year lock term. Interest rates differ from the banking sector to the banking sector.

ELSS:

Market-linked returns are offered by ELSS. The dividends are exempt from taxes and are locked in for three years.

Pension Schemes:

Under Section 80CCC, deductions for pension plan premium payments are permitted. Rs. 1,50,000 is the highest deduction allowed under Sections 80C and 80CCC.

Senior Citizen Savings Scheme:

SCSS currently has an annual interest rate of 9.20%. Interest gets paid on a quarterly basis. However, the interest is subject to tax.

Home Loan Repayment:

The amount of the EMIs, if you’re paying off a home loan and are making payments, is deductible under this section of the law.

Paid tuition fees:

The costs of your kid’s tuition expenses are also eligible for a deduction under this section.

Policy for 80D Investments’ medical insurance

The amount that can be deducted for the medical insurance purchased is up to Rs. 15,000. If you or your spouse are older than 60, a deduction of Rs. 20,000 is possible. If both your parents are under 60 years old and you are responsible for paying for their medical insurance, you are eligible for extra deductions of Rs. 15,000. If your parents are older than 60, you may be eligible for a deduction of up to Rs. 20,000. This provision allows for a maximum deduction of Rs. 40,000.

Investment of 80 DDB for medical assistance for certain illnesses

If the assessee is receiving treatment for one of the above diseases, a deduction of up to Rs. 40,000 is possible. If a dependent of the assessee is receiving treatment for one of the above disorders, a deduction may be made. The maximum benefit for older persons is Rs. 60,000, and for extremely senior citizens, it is Rs. 80,000.

Interest paid on student loan deductions under Section 80E

You may deduct interest on higher education loans that you have taken out for yourself, your spouse, your children, or a child over whom you have legal custody.

Deductions under Section 80EE for interest paid on a home loan

If you are a first-time property buyer and the first property you purchased has a value of at least Rs. 40 lakh and if you took out a loan for less than Rs. 25 lakh, you may be eligible for a tax break of up to Rs. 1 lakh under this provision.

Investment 80TTA: Savings account

Under this section, interest on savings accounts up to Rs. 10,000 is deductible.

Donations to nonprofit organizations are considered an 80G investment.

A variety of donations made to charitable organizations are deductible. Either a 100% or 50% deduction is possible. The deduction for tax purposes will not be allowed if the donations exceed Rs. 10,000 in cash.

80GG Deduction: House Rent Paid

Rent less 10% of total income, the home rent allowance provided, or 25% of total income, whichever is less, is the minimum allowable deduction for house rent paid.

80DD Deduction: Rehabilitation of Dependent Relatives with Disabilities

If you are caring for a family member who is disabled and their impairment is 40% or more but less than 80%, you are eligible for a deduction of Rs. 75,000. You receive a set deduction of Rs. 1,25,000 if your impairment is greater than 80%.

80U Deduction: Physically Disabled Individual

If you have a physical handicap, you are entitled to a deduction of Rs. 75,000. If your handicap is significant, you can deduct Rs. 1,25,000.

Contributions made to political parties by corporations are deductible under Section 80GGB.

This section permits deductions for contributions made by an Indian firm to an electoral trust or a political party.

Contributions paid by a person to a political party are deducted under 80GGC.

Deduction for income received as a result of a patent royalty under section 80RRB

The assessee may deduct up to Rs. 3 lakh of the revenue earned if he or she is getting royalties for a patent that they have filed. A person resident who also holds the patent must be the assessee.

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