Only a few days are left for the financial year 2022-23 to end. If you haven’t made any investment till now to save tax for the current financial year, do it soon. March 31 is the last date. Investing in tax saving schemes reduces your tax liability. Hence, it makes sense to choose this investment carefully.
General budget and new tax regime of the government
In the general budget, the government has introduced a system of tax exemption on income up to seven lakh rupees to make the new tax regime attractive. The benefit of standard deduction of Rs 50,000 has also been given. There has been no change in the old tax slabs. Despite this, many types of exemptions are still available in the old system. In such a situation, if you have opted for the old tax regime and have not made any investment till now, then there are four investment avenues available to save tax at the last moment.
Health insurance
Health insurance not only saves you from exorbitant medical bills but also helps in saving tax. You can get exemption on this under 80D. You can get a deduction of Rs 25,000 annually on premiums paid for self, spouse, children and parents. The exemption limit for senior citizens is Rs.50,000. Also, one can get a deduction of Rs.5,000 under 80D for preventive health check-up costs.
Equity Linked Savings Scheme
Investments in Equity Linked Savings Scheme (ELSS) with a lock-in period of three years can get tax exemption of up to Rs 1.50 lakh under the Income Tax Act. There is also risk in this. But, it can potentially give good returns. The risk associated with ELSS can be reduced by investing for a long time through SIP. Investing in this can be done online. Tax planning can be a complicated task. Delay in this may cause you unnecessary stress. To avoid this, you can invest in the above four instruments to save tax according to your annual income and income from other sources (if any).
National Pension Scheme
National Pension Scheme (NPS) is a government scheme. There is no risk on investment in this. You can get tax exemption on investment in this. Salaried employees get a rebate of up to 10% of the salary in the scheme. Self-employed professionals can get a deduction of 20% of their gross income. Under Section 80CCD (1) of the Income Tax Act, you can get a rebate of Rs 1.50 lakh on investment in this. An additional deduction of Rs 50,000 is available under 80CCD(1B), taking the total deduction to Rs 2 lakh.
Term insurance
Term insurance is an essential investment tool that provides financial support to your dependents in case of unfortunate death. Also, you can save tax with term insurance. You can get a rebate of up to Rs 1.50 lakh annually under 80C on the payment of its premium. In addition, the maturity amount or death benefit received by your beneficiary is also tax-free. While buying term insurance, choose the company which has the highest claim settlement ratio.
