Income Tax Planning: People often avoid implementing plans to save income tax. Due to this, many taxpayers have to bear a substantial loss.
The financial year 2023-24 has started from April 1. This time the planning to save tax starts with choosing the tax regime. Let tax saving and financial planning go step by step, prepare a blueprint for this now. The affair of saving tax at the last minute can cause loss.
From the financial year 2023-24, the new tax system has been made the default system. Although the option of the old tax regime will be available, but you will have to choose it. Salaried individuals must have started receiving e-mails to choose the tax regime, so that the employer i.e. the company can deduct the appropriate TDS. Many changes have been made in the new system in the budget, after which savings have increased in it.
There is no need to invest in the new system to save tax. Here you should invest keeping in mind the financial security and financial goal, but if you choose the old system then you will have to resort to investment to save tax.
The returns on investment in PPF are tax-free and the risk involved is negligible. PPF currently has an annual interest of 7.1 percent. In the old tax regime, a deduction of up to Rs 1.5 lakh is available on investment in PPF under Section 80C of the Income Tax Act.
In Equity Linked Savings Scheme ie ELSS, money is invested in equity based products, hence good returns are expected in the long term. This is a good option to save tax and get higher returns. Keep in mind that in ELSS, returns are not fixed but according to the market. It has a lock-in of 3 years, which is the lowest as compared to other tax saving options.
National Pension System ie NPS is a good option both in terms of saving tax and adding capital for old age. Investing in this gives an additional tax exemption of Rs 50,000, which is over and above the 80C deduction of Rs 1.5 lakh. If you opt for the new tax regime, then the additional deduction of Rs 50,000 will not be available. However, can add up to a good amount for retirement.
