Filing ITR under the old tax regime? Here are some tax-saving options to consider before the March 31 deadline

Taxpayers opting for the old tax regime can save taxes by investing in certain financial instruments before the end of the financial year on March 31.

It is advisable to make tax-saving investments as early as possible, but many taxpayers keep procrastinating until the last day.

Ideally, you should do all tax-saving investments at the start of the financial year. Waiting till the last day results in many disadvantages for taxpayers:

• In the last-minute rush, taxpayers often fail to identify the best investment options
• The opportunity to earn interest by investing early is lost because of delay
• Failure to have a proper tax plan eventually hurts the long-term financial goals

With around three months left before the end of the tax-saving investment deadline for FY 2024-25, here's a look at the investment options available to taxpayers under the old regime.

Investment options for section 80C

Under this section of the Income Tax Act 1961, taxpayers can claim a deduction of up to ₹1.5 lakh while filing their returns.

There are several schemes where you can invest up to ₹1.5 lakh to claim the deduction, including Public Provident Fund, National Savings Certificates, Senior Citizen Savings Scheme, 5-year fixed deposit in banks and the post office, Equity-linked Savings Scheme (ELSS), Unit-linked Insurance Plan (ULIP).

Employees' provident fund contributions and the amount spent on Life Insurance premiums (section 80CCC), National Pension System (section 80CCD (1)) and home loan principal payments also qualify for section 80C deduction.

The maximum deduction you can claim by investing in all the above-mentioned schemes is ₹1.5 lakh.

Additional tax-saving under NPS

Under section 80CCD (1B), you can claim an additional deduction of up to ₹50,000 by investing in the National Pension System (NPS). This is in addition to the ₹1.5 lakh deduction limit under section 80C.

Health insurance premiums

You can claim a deduction on the amount paid for health insurance premiums under section 80D of the Income Tax Act, 1962. The maximum limit for such a deduction in a financial year is ₹25,000 for a regular citizen and ₹50,000 for a senior citizen.

If you are planning to invest in any tax-saving scheme, it is recommended to consult a financial planner, who will help you optimise your taxes and investments.

Donation

If you wish to make a charitable donation, you can claim a deduction under section 80G for donations made to registered charitable organisations.

Reinvest capital gains

You can also reinvest your long-term capital gains from residential property and other capital assets to avoid taxes.

For instance, if you have sold a residential property in FY 2024-25, you can reinvest the long-term capital gains (LTCG) from the sale proceeds into a new residential property to avoid taxes. Similarly, you can also reinvest LTCG from equity and mutual funds into a residential house.

If you are unable to reinvest the LTCG in a residential property, you can instead invest the amount into the Capital Gain Account Scheme (CGAS) provided by banks.

Conclusion

With less than 90 days left before the end of FY 2024-25, you should complete all your tax-saving investments before March 31.

In addition to the options mentioned above, there are several other ways to save on taxes. For example, you can claim a deduction for the amount paid as home loan interest.

With so many options available, maximizing tax savings can often be overwhelming for taxpayers. It is advisable to consult a tax planner to fully utilize all tax-saving opportunities.