How to Save Income Tax in India for FY-24-25?

• Written by Nidhi Goyal

  Reviewed by Akhil Pillai

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Paying taxes is the civic duty of every Indian citizen. The government utilises the tax to fund facilities used by the country’s public. As per the Income Tax Department of India, only 8.62 crore people have paid income tax in AY24. Nearly Rs. 14.43 lakh crore has been produced as revenue from the tax payment. The Central Board of Direct Taxes (CBDT) has made tax collection efficient. It is the responsibility of individuals to pay taxes if their income is in the taxable bracket. It's also wise to optimise your tax savings. With the help of the tax-saving provisions, they can grow their savings. It is necessary to know about the tax slab, which will give you a fair idea of how to save on taxes in India and the best way to do so.

The various income tax slabs are mentioned below, based on the latest Income Tax slabs for the year 2024-25.

There is an additional cess at 4% of the total tax payable that is imposed. There is a surcharge of 10% of the total income paid by individuals earning more than 50 lakhs annually. The Central Government has made various provisions per the Income Tax Act 1961, to reduce the monetary burden.

How can Salaried Individuals Save Tax?

Most of you tend to invest in different products that can burden you financially. To reduce this burden, the government also helps by providing income tax waivers on direct taxes that are levied on the total salary. If you are thinking about how to save tax on your salary, then you can opt for a home loan and avail of the tax benefits as per Section 80C. Getting a home loan comes with dual benefits as it reduces tax liability, apart from giving the relaxation of having your own home. Many housing schemes make housing affordable, while Section 80C reduces financial liability by reducing the tax burden and is one of the best tax-saving options for salaried.

With the help of a home loan, you can lower the taxable income as a significant part of the home loan is claimed under Section 80C, up to 1.5 lakhs.Some of the other income tax saving options are as follows:

• Opt for Health Insurance: Considering medical inflation and increased health insurance, medical insurance is paramount These policies lower the financial burden at the time of the medical crisis. You can also claim tax deductions on the premium under Section 80D of the Income Tax Act, 1961. For people above the age of 60, the limit has been increased to Rs.50000.
• Engage in Investments: Investing in capital markets and schemes administered by the government can help you create wealth and also helps in saving tax. You can also choose to prefer tax benefit investment tools such as Equity Linked Savings Scheme (ELSS). Apart from this, you can also invest in a 5-year fixed deposit to avail yourself of tax exemption benefits without any risk. Investments of up to 1.5 lakhs can be claimed under Section 80C.
• Invest Your Money in Government Schemes: The government administers many schemes that offer high returns on investments apart from tax waivers. You can avail of tax exemptions by investing in the following schemes under Section 80C of the Income Tax Act:
  
  a) Senior Citizens Savings Scheme(SCSS)
  b) National Pension Scheme(NPS)
  c) Public Provident Fund (PPF)
  
  
• Make Donation to Charity: You can avail of a tax deduction on charitable donations. There is no upper limit applicable, but there are rules that decrease the amount of tax deduction on charitable contributions. Donations for specific organisations in cash amounting to Rs. 2000 are allowed under Section 80G of the Income Tax Act. For making donations to NGOs, the limit is 50% of the donated amount and up to 10% of the total income.

Tax Saving Schemes

• Sukanya Samriddhi Yojana: A unique government scheme for a girl child which enables her parents to open an account for her until she reaches age 10. Its investment range is Rs250/ to Rs 1.5 lakh per FY and matures when the girl turns 21.
• Buying a House: Section 24 allows you to get a deduction on a home loan of up to Rs 2 lakhs. Also, for U/S 80EE, you can get an additional deduction from taxable income of Rs 50,000 on the home loan, provided the housing loan should not be more than Rs 35 lakhs and the value of the residential house value should be less than Rs 50 lakhs. Moreover, the loan should be sanctioned in the previous financial year. The construction/acquisition of the house should be completed within 5 years.
• Child Education Plans: Under sections 80C and 10 (10D), you can get 9% to 15% p.a. Returns with a lock-in period of 5 years.
• Tax-Saving FD Scheme: FDs also offer tax benefits under the Income Tax Act. They have a specific lock-in period; you can’t withdraw the amount before that.
• Infrastructure Bonds: Also known as 54EC bonds, infrastructure bonds are long-term debt securities issued by companies to the government to fund infrastructure projects. Power Finance Corporation (PFC), Rural Electrification Corporation (REC), and Indian Railways Finance Corporation (IRFC) entities issue eligible bonds.

Tips for Parents to Save Tax with One Source of Income

• Public Provident Fund (PPF)
• Term Insurance Plan
• Tax exemptions per IT Slab
• Invest at least 20% of your income in market-linked investment options.

Income Tax Saving Tips for Parents with Double Income

• PPF
• Avail EEE benefits by allocating 20% of annual income to market-linked investment options.
• Choose a term insurance with SI 15 to 20 times your income.
• Under 80C, you can save Rs 3 lakh.
• Put 10% of your entire family’s income in a pension fund.

How Senior Citizens and Retired People Can Save Tax

• Schemes like Senior Citizen Savings enable people above 60 to save tax. Many insurance companies provide annuity product options with premature withdrawal benefits.
• Section 80C, ULIPS (Unit-Linked Insurance Plans) allows premium exemption of up to Rs 1.5 lakh.

To Sum Up

The best time to start saving tax is the beginning of the annual year. Most people delay it until the end of the last quarter of the year, which is not good practice. If you plan at the beginning of the year, tax-saving investments can help you achieve your goals. It is essential to start tax–saving before 31st March and file your returns within due time. Hope these smart tips will help you in saving more tax.

Disclaimer: The above information is for reference purposes only. The tax exemptions are subject to the rules and regulations of the Income Tax Act of India 1961.