Kolkata: Yet another financial year is about to end. March 31, 2025 which will bring down curtains on the year 2024-25 is less than 6 weeks away. For those who are in the old income tax system, have to invest in tax deductible instruments before March 31. Therefore, it is important that one has a look at the common options available to an individual to claim tax deductions.
However, in practice, employers do not allow one the leeway to invest in the second half of March and claim deductions on it that will show in the salary. Employers want to wrap it up by February. Therefore, one does not have too many days in hand. Let’s have a look at the options.
Which instruments are tax free
A whole range of instruments are tax free in India. These are defined under various sections of the Income Tax Act 1961. These are section 80C, 80CCC, 80CCD (1), 80CCD(2) and 80D. A wide array of instruments are mentioned in these sections from health insurance premiums to Public Provident Fund, NPS to interest on home loans.
Public Provident Fund (PPF), Tax saver FDs
Both these instruments are mentioned in section 80C of the Income Tax Act. Both are immensely popular. You can invest a maximum of Rs 1.5 lakh in either a PPF account or a tax free bank FD. By the way, the tenure of a tax-free bank FD is 5 years. A PPF account carries a 15-year lock in period but can be extended by blocks of 5 years even after the expiry of the initial 15-year period.
ELSS funds, SSY investments
While anyone can invest in Equity-Linked Savings Scheme (ELSS), only those who have a daughter can invest in Sukanya Samriddhi Yojana (SSY). Moreover, the SSY account must have been opened by a person for his/her daughter before she attained the age of 10 years. ELSS fund carry a lock-in period of three years and they provide the double benefit of capital growth and tax deductions. The upper limit of investments is Rs 1.5 lakh a year.
National Pension System (NPS), medical insurance premia
NPS contributions qualify for income tax deductions. This is according to Section 80CCD(1B) of the Income Tax Act. The maximum deduction is Rs 50,000 under this section. Also, Section 80D of the Income Tax Act permits one to claim deduction up to Rs 25,000 a year on health insurance premiums.
Though a majority of people have switched to the new income tax regime, a large number of taxpayers are still in the old regime which allows one to invest in income tax deductible instruments and claim relief on them. There is not much time left for FY25 to end. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
