How Can You Save More While Filing ITR? Tax Deduction Ways That Help In Saving

There are several ways to save while filing your income tax return (ITR) as the Income Tax Department recognizing the significance of fostering savings and investments, has incorporated a comprehensive set of income tax deductions.

Under the section 80C of the Income Tax Act, you can claim tax deductions on various investments and expenses. However, Section 80C deductions are only available under the Old Tax Regime. These deductions can be claimed only for the financial year in which investments or expenses are made.

How To Save More While Filing ITR

Here are some ways to save more while filing ITR:

Eligible Investments:

• Public Provident Fund (PPF): Contributions to PPF accounts are eligible for deduction, offering tax-free interest and returns.
• Employee Provident Fund (EPF): Contributions made by employees to EPF are eligible for tax deduction.
• National Savings Certificate (NSC): Investments in NSCs qualify for deductions, with fixed returns over a set period.
• Life Insurance Premiums: Premiums paid towards life insurance policies for self, spouse, or children qualify for deductions.
• Tax-Saving Fixed Deposits (FDs): These FDs have a 5-year lock-in period and offer tax benefits.
• Equity-Linked Savings Scheme (ELSS): ELSS mutual funds offer tax benefits and potential for capital appreciation.

Other Eligible Expenses:

• Home Loan Principal Repayment: The principal portion of home loan EMI is eligible for deduction.
• Tuition Fees: Fees paid for children's education can be claimed as deductions.

How To Maximize Tax Savings:

• Utilize the maximum deduction limit: Invest up to Rs 1.5 lakh to maximize tax benefits.
• Plan investments wisely: Choose instruments that offer the best tax benefits and align with your financial goals.
• Diversify investments: Spread investments across multiple eligible instruments to manage risks and optimize returns.
• Keep track of documentation: Maintain proper records of investments and expenses to support tax claims.

Also Read: Income Tax Return Filing: How To File ITR Without Form 16—Here Is A Step-By-Step Guide