Unlock the Secrets to Tax Savings in India 2024

The Union Budget is out! And now, it is time for us to Plan - with a capital ‘P’.  In our last blog, we talked about being financially disciplined. In this blog, let’s dive deep into the confusing world of tax laws and their sections to unlock the secrets of smart tax planning for the fiscal year 2023-24. It’s time to make your financial journey exciting and rewarding! 💰

Optimize Your Salary 💼

Did you know that restructuring your salary can work wonders for your tax savings? Yes, that's right! You can significantly reduce your taxable income by smartly dividing your salary into components like House Rent Allowance (HRA) and Leave Travel Allowance (LTA). Reach out to your payroll team to get the ball rolling. Remember, every penny saved is a penny earned! 🤑

New Regime or Old? 🤔

With the introduction of the new tax regime, you can choose between the old and new systems. Analyse which one suits your financial goals better and make an informed decision. Pick the old regime if you have a considerable amount of investments and make the most out of the tax benefits you get under the regime.

Investment Options 📈

Investing in tax-saving instruments is a game-changer. Consider options like Public Provident Fund (PPF), National Savings Certificate (NSC), and Employee Provident Fund (EPF), which not only offer tax benefits under Section 80C but are also excellent for long-term wealth creation.

You can also opt for tax-saving fixed deposits and explore Sukanya Samriddhi Yojana for your girlchild's future. They both provide a tax exemption under Section 80C.  

Remember, you can save up to ₹1.5 lakh from your taxable income under this section.

Secure Your Loved Ones and Save Tax

A life insurance policy is a must for every household. It secures your family against any financial crisis, if something happens to you. The tax benefit it offers under Section 80C is the cherry on the top. Besides this, a life insurance claim (or the death benefit) is exempted from tax under Section 10 (10D).

Any other gain from an insurance policy, such as guaranteed returns from savings insurance policies or market-linked returns from Unit Linked Insurance Plans (ULIPs), is also tax-free, except for one caveat. Gains from ULIPs (bought after Feb 1, 2021) will be exempted from taxes, only if your premiums are less than ₹2.5 lakh.  

Psst… if you don’t own a life insurance policy, this a great time to buy one, with the best discounts and offers. Check out our best-selling term plan, iTerm Prime, and get started.

Health is Wealth - and Tax Saving Too! 🏥

Under Section 80D, you can claim deductions for health insurance premiums for you and your family, including preventive health check-ups. You can also top-up your life insurance plan with an additional critical illness rider to get tax exemption under Section 80D.  It is true when they say health is wealth!

Plan for Retirement with NPS 🧓

The National Pension Scheme (NPS) isn't just about securing your golden years; it's also about saving taxes too! Contributions to NPS qualify for deductions under Section 80CCD (1) with a cap of ₹1.5 lakh (includes all other investments such as life insurance, EPF, PPF tuition fees of children, etc as covered under 80C).

NPS subscribers also get an additional deduction of a maximum ₹50,000 under Section 80CCD (1B). This is a superb way to reduce taxable income while securing your future. 🚀

Home Sweet Tax-Saving Home 🏡

Owning a home is a dream for many, and if you have a housing loan, tax benefits are waiting for you under Sections 24(b) and 80EE. So, turn your dream home into a tax-saving haven!

Give and Save 🤲

Being charitable not only feels good but also helps save taxes. Donations to eligible institutions can get you deductions under Section 80G. Giving back to society has never been more rewarding! Make sure you get a receipt for all the charitable donations you make.

Education Loans - Invest in Knowledge 🎓

Section 80E allows deductions on interest paid for education loans. Remember, investing in education is investing in the future!

One Last Word 🌈

Keep your investment documents, (payment receipts,  bonds, and certificates) safe. They should be handy while you file your taxes. Always consult a professional before making any financial decisions.

Remember, smart tax planning is not just about saving money; it's about making informed choices that align with your life goals. At Bandhan Life, we're committed to helping you navigate these waters smoothly. So let 2024 be the year of smart financial decisions with Bandhan Life by your side!