A Guide To Last-Minute Tax Saving

With only a handful of days left in the current financial year, making last-minute tax-saving plans are like trying to score 36 runs in the last over of a cricket match. Cricket analogies aside, this is actually possible.

But first, here's a quick run through of everything that was available at the start of the year, so you can plan your investments next year well in advance.

Section 80C

Most salaried individuals make use of Section 80C of the Income Tax Act to make basic tax-saving investments. The total deduction to taxable income available under this section is Rs 1.5 lakh.

The first thing you have to do is check your contribution to the employees' provident fund. That, like some other deductions from your taxable income, happens automatically by your employer.

Additionally, under Section 80C, you get deduction on the payment towards principal amount in a home loan's equated monthly installment. But this will be included under the overall Rs 1.5 lakh limit.

There are multiple heads under which you can avail of the remaining deductions. These include investments made in:

Other Avenues

Another Rs 50,000 can be saved by investing in the National Pension Scheme under Section 80CCD of the Income Tax Act.

Under Section 80D, you can take a health insurance cover for yourself and a premium of up to Rs 25,000 is deductible from your taxable income. Additionally, if you have senior citizens at home, you can buy health insurance policies for them and avail of a further deduction of up to Rs 30,000 for premium paid.

If your salary does not include a provision for house rent allowance, Section 80GG allows you to reduce up to Rs 60,000 from your taxable income.

Also Read: The NPS Vs Mutual Funds Debate

Education loans are sometimes a drag, but Section 80E of the Income Tax Act lets you deduct the entire interest paid during a year from your taxable income for your own higher education, or that of your spouse or children.

As part of its bid to encourage home ownership, the government provides benefits to new home buyers under Section 24 of the Income Tax Act. Interest payments on housing loans to the extent of Rs 2 lakh can be reduced from taxable income. And the best part is that your spouse is also eligible for a similar deduction, so the total benefit afforded is Rs 4 lakh towards payment of the interest portion of your housing loan EMI.

Finally, the interest you earn from your savings bank account up to Rs 10,000 is also deductible from your taxable income.

What's Possible Now?

Clearly, it is a little implausible to think that you're going to go out and buy a house, and avail of a home loan, just to save on tax. But there are several investments you can still make.

• After determining your contribution to the EPF, the remainder can be invested in PPF, ULIP, ELSS, or five-year fixed deposit, for availing benefits under Section 80C.
• A life insurance policy might be a little hard to get done, because it requires a detailed health check-up, which might take too long.
• An investment in the NPS is also possible. Also, health insurance schemes bought for both yourself and senior citizens in your immediate family can also be availed.
• Find out the interest you've earned from your savings bank account, and that's an automatic deduction, of up to Rs 10,000, you can claim under the Income Tax Act.

Now, with all that covered, take a breath! There's still more than enough time to save on tax, but don't forget to take advise from a licensed financial planner.