Top 7 Tax-Saving Hacks Every Indian Must Know in 2024

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Introduction


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Tax-saving is an essential part of financial planning for every Indian. It not only helps reduce your tax burden but also builds a solid foundation for wealth creation. While there are many options available to save taxes, it’s important to choose the right ones that align with your financial goals. In this article, we’ll explore the top 7 tax-saving hacks for 2024 that every Indian must know. These strategies will help you maximize your savings and minimize your taxes—legally!

1. Maximize Section 80C Investments

Section 80C is one of the most popular sections for tax-saving. It allows you to save up to ₹1.5 lakh on your taxable income by investing in certain instruments. Some of the best options under this section include:

  • Public Provident Fund (PPF)
    The PPF is a government-backed, long-term savings scheme that offers an attractive interest rate, which is currently around 7.1%. The best part is that the returns and the interest earned are tax-free.
    • Tax Saving: You can invest up to ₹1.5 lakh in a PPF account.
    • Lock-In Period: 15 years, with partial withdrawals allowed after 6 years.
  • Equity-Linked Savings Scheme (ELSS)
    ELSS is a type of mutual fund that offers tax savings with an investment horizon of just 3 years. The returns are linked to the performance of the stock market, making them potentially high but also risky.
    • Tax Saving: ELSS investments are eligible for tax deduction up to ₹1.5 lakh under 80C.
    • Best For: Investors willing to take moderate to high risks for better returns.
  • National Savings Certificate (NSC)
    The NSC is a low-risk, fixed-income investment scheme. It offers guaranteed returns and is ideal for conservative investors.
    • Tax Saving: Maximum investment is ₹1.5 lakh, and the returns are taxable, but they are eligible for tax deduction.
    • Lock-In Period: 5 years.

Pro Tip: Combine ELSS with PPF for a balanced portfolio. High risk with ELSS, and stability with PPF.

2. Save More with the New Tax Regime

The government introduced a simplified tax structure, known as the New Tax Regime, with reduced tax rates but without deductions. However, you can still save taxes by understanding both the old and new regimes.

  • New Tax Regime Benefits:
    • Reduced tax slabs starting from ₹2.5 lakh.
    • No need to claim deductions like 80C or HRA.
    • Ideal for those who don’t have large investments or deductions.
  • Old Tax Regime:
    • Deductions available for 80C, HRA, and other exemptions.
    • Higher tax burden if you don’t have many deductions.

When to choose which?
If you have significant tax-saving investments (like PPF, ELSS, or home loan), stick with the old regime. If you don’t, the new regime might save you more.

3. Claim Deductions on Home Loans (Section 80EEA)

Home loan repayments are another great way to reduce your taxable income. Section 80EEA offers additional tax benefits on home loans under the following two heads:

  • Principal

    Repayment    : You can claim deductions of up to ₹1.5 lakh on the principal repayment under Section 80C.
  • Interest Repayment: You can claim up to ₹2 lakh on home loan interest payments under Section 24(b).

Bonus Tip: First-time homebuyers get an additional ₹1.5 lakh deduction under Section 80EEA for home loans up to ₹45 lakh.

4. Health is Wealth – Save with Health Insurance (Section 80D)

Investing in health insurance is not only essential for securing your family’s health, but it also offers attractive tax-saving opportunities:

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  • Individual Policy: ₹25,000 deduction for a policy covering yourself or your family (spouse and children).
  • Senior Citizens: Up to ₹50,000 deduction for policies covering senior citizens (aged 60 years or more).
  • Critical Illness: Some policies covering critical illnesses may allow higher deductions.

Not only does health insurance protect your finances from unexpected medical expenses, but it also provides a significant tax deduction each year.

5. Freelancers & Business Owners: Claim Work-Related Expenses

Freelancers and business owners have a fantastic advantage when it comes to tax-saving. You can claim deductions on almost all work-related expenses, such as:

  • Office Rent
  • Office Supplies and Equipment
  • Travel Expenses
  • Internet and Communication Bills

Ensure that all business-related expenses are documented properly and receipts are retained to make claiming deductions easier during tax filing. The more you invest in your business, the less you pay in taxes!

6. Donate to Charity and Save More (Section 80G)

Making charitable donations can not only help society but also provide a significant tax saving. Section 80G allows for 100% tax deduction on donations made to approved charities or relief funds.

  • Eligible Donations:
    • PM National Relief Fund
    • Swachh Bharat Kosh
    • NGOs and Charities with registration under Section 80G.
  • How Much Can You Claim?
    • 100% of the donation, or 50% depending on the charity.

Remember: Keep the donation receipt to claim your deductions.

7. Make the Most of NPS (National Pension Scheme)

The NPS is an excellent long-term retirement investment scheme that provides dual tax benefits:

  • Section 80CCD(1B): An additional ₹50,000 can be claimed over and above the ₹1.5 lakh limit of Section 80C.
  • Employer Contributions: Employer contributions to NPS are also tax-free.

NPS not only offers tax-saving benefits but also builds a secure financial future. The earlier you start contributing, the better your retirement will look.

Conclusion

Tax-saving should be a part of every financial plan, and with the right strategies, you can reduce your tax burden and build wealth simultaneously. Start implementing these tax-saving hacks today, and you’ll see significant savings in the coming year. Remember, the key to successful tax planning is consistency and smart choices!


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