Time is Running Out: FY 2023-24 Last-minute Tax Saving Tips in March

It's March, and if you remember to save taxes now, you aren't alone. 

Procrastination can lead you to March without any solid tax saving plan. We Indians are generally quite frugal, but we tend to leave money on the table when it comes to tax savings. There are multiple opportunities like equity-linked saving schemes (ELSS), National Pension System (NPS), under section 80Cand health insurance premiums under section 80D. 

As the deadline is near, you must be in haste, but it is critical not to commit mistakes, as financial mistakes can hurt you for years. 

Here are brilliant tax saving tips to help you save taxes at the last moment.

Invest now, Don't wait till March 31

Just because you remembered saving taxes in March doesn't mean you should procrastinate and wait until 31 March to invest in tax-saving instruments. Even though financial awareness has increased man-fold in the past few years, the habit of delaying tax-saving investments has remained the same for the majority of people.

Sometimes, we focus on minute, complicated financial issues while we are yet to complete basic and crucial tax-saving investments. In the last few days, you will be in a hurry, so there will be no time to research tax-saving investments, and you will be doing it just for the sake of doing it and not gaining any real benefit.

Take some time out to research about your tax saving investment and think with a long-term vision.

Contribute to Provident Fund

One of the best tax saving tips for employees is to contribute to their provident funds. Discuss with your employer and invest in provident funds to save taxes and prepare for your future. Whether it is a Public Provident Fund (PPF), Sukanya Samriddhi Account, NPS, tax-saver fixed deposits, or any other Section 80C instrument, do thorough research before investing, as these investments have long lock-in periods. 

These investments are also based on your risk appetite, as the returns are market-linked. Provident fund investments can help you save taxes and also build a massive retirement corpus. 

Don't hurry while buying Life Insurance 

Life Insurance is not just a tax saving options for salaried other than 80C; it is a long-term investment that provides financial protection to your loved ones. It provides financial stability and peace of mind to our family and yet we are in haste while choosing one.

You will be paying the life insurance premium for a long time, so look at life insurance at a broader aspect than to just save taxes. You don't want to get yourself in a situation later on when the life insurance is not adequate. 

For salaried individuals, here are 21 ways to save taxes from salary. 

Optimize Health Insurance Premiums

In recent years, health insurance has become a tool for filling the gap and tax saving in India. With Section 80D, you can get a tax deduction of up to Rs 25,000 on health insurance premiums paid for yourself, your wife and kids, and another Rs 25,000 for parents (up to Rs 50,000 for senior citizens). Personal finance is important, but so is our health, so when you look for health insurance, make sure your primary goal is to safeguard your health and not just to save taxes. 

You also don't need to pre-pay your health insurance premium for the upcoming years; you can claim tax deductions over three years in instalments. 

Claim Deductions on Home Loan Interest

When the deadline is near a lot of start wondering what to do. A smart way to save taxes is by claiming tax deductions on home loan interest under Section 24. Purchasing a house has become a common norm in Indian families as it provides a sense of security and achievement. The interest you pay on your home loan is eligible for tax deductions, so make sure you avail the deductions. 

Explore Beyond Section 80C

When it comes to tax-saving in India, the option that comes to everyone's mind is Section 80C. Majority of people will get tax deductions with Section 80C in the form of Equity Linked Saving Schemes (ELSS), Public Provident Fund (PPF), National Savings Certificate (NSC), and Tax-saving Fixed Deposits (FDs) and feel that the job is done, but there are numerous other tax saving options for salaried other than 80C. Here are some of the best tax saving options besides the usual Section 80C.

Section 80D: Claim deductions for medical insurance premiums paid for yourself, spouse, parents, and dependent children.

Section 80G: Reduce your taxable income by donating to charitable institutions with valid receipts under Section 80G. 

Section 80E: If you've taken an education loan for higher studies, claim tax deductions on the interest paid.

Section 80TTA: For senior citizens, interest earned on savings accounts up to Rs. 50,000 is exempt from tax.

Tax savings for HUF

When it comes to tax saving, most people think about salaried individuals, but we tend to forget that there are close to 10 lakh Hindu Undivided Families (HUF) that file taxes. So, if you're part of a HUF, don't feel left out. Here are some tax saving options for HUF.

Separate Basic Exemption Limit: An HUF enjoys a basic exemption limit of Rs. 2.5 lakh, in addition to the individual limits of its members. This translates to potential tax savings.

Investment Opportunities: Similar to individuals, HUFs can invest in tax-saving instruments under Section 80C with a separate limit of Rs. 1.5 lakh. Explore ELSS, PPF contributions for HUF members, tax-saving FDs, and more.

Interest on Home Loan: If an HUF co-owns a property with you, the interest paid on the home loan can be claimed as a deduction under Section 24(b) up to a limit of Rs. 2 lakhs.

Conclusion

While it is important to follow the above tips to save taxes, it is equally important to ignore bogus tips, as it can lead you to trouble. In India, everyone wants to give advice, but remember that tax-saving is a subject where the one-fits-all solution doesn't work, and everyone has different expectations and requirements. 

People get quite excited when the topic is related to tax filing and saving, but you shouldn't take financial advice from people who aren't experts in the industry. Although their intentions might be good, their lack of knowledge and experience can hurt your wallet. Keep in mind the above tips to nail your tax savings in March.

Frequently Asked Questions:

1. Why focus on last-minute tax-saving tips in March in India? 

March is crucial for Indian taxpayers as it marks the end of the fiscal year. It's the last chance to utilize tax-saving opportunities and reduce tax liabilities before the financial year ends on March 31st.

2. What are some common last-minute tax-saving strategies for Indian taxpayers?

Invest in tax-saving instruments such as Public Provident Fund (PPF), Equity Linked Savings Schemes (ELSS), National Pension System (NPS), and Tax-saving Fixed Deposits (FDs).

Utilize deductions under Section 80C of the Income Tax Act.

Contribute to the National Pension System (NPS) for additional tax benefits under Section 80CCD(1B).

Make charitable donations eligible for deduction under Section 80G.

3. Can I still invest in tax-saving instruments in March for the previous financial year? 

Yes, many tax-saving investments allow contributions until March 31st, enabling taxpayers to claim deductions for the previous financial year.

4. What is the maximum deduction allowed under Section 80C of the Income Tax Act? 

Under Section 80C, taxpayers can claim deductions of up to Rs. 1.5 lakh for investments in specified instruments such as PPF, ELSS, life insurance premiums, and certain FDs.

5. Are there any additional tax-saving opportunities apart from Section 80C? 

Yes, contributions to the National Pension System (NPS) are eligible for an additional deduction of up to Rs. 50,000 under Section 80CCD(1B) over and above the limit of Section 80C.

6. How can charitable donations help with tax savings in India? 

Donations made to eligible charitable organizations registered under Section 80G of the Income Tax Act are eligible for deduction from taxable income, thereby reducing the tax liability.

7. Is it advisable to invest in tax-saving instruments solely for the purpose of tax savings? 

While tax-saving investments offer benefits, it's essential to consider factors such as investment objectives, risk tolerance, and financial goals before making decisions solely for tax-saving purposes.

8. What documents should I gather for last-minute tax planning in March in India? 

Collect documents related to investments made during the financial year, such as investment statements, receipts for charitable donations, and proof of eligible expenses for deductions.

9. Should I seek professional tax advice for last-minute tax planning in India?

If you have complex financial situations or are unsure about tax-saving strategies, consulting a tax advisor or chartered accountant can provide personalized guidance and ensure compliance with Indian tax laws.

10. What are the consequences of missing the tax filing deadline in India?

Failing to file taxes by the deadline can lead to penalties and interest charges. It's crucial to file returns on time to avoid these penalties and maintain compliance with Indian tax regulations.

Remember, while last-minute tax-saving strategies can be beneficial, it's advisable to plan tax-saving investments and expenses throughout the year to maximize savings and minimize last-minute rush and errors.