From PPF to FDs: Last-minute income tax saving options you can explore

The deadline for availing of tax-saving benefits is March 31st. Complete your investments and payments before this date to maximise your savings. Employers encourage tax planning every year, yet many find it stressful due to a lack of understanding. With the end of the financial year (FY2024-25)approaching, those in the old tax regime must make informed income tax-saving investment decisions before the March 31st deadline.

Here are some last-minute tax-saving options

1) National Pension System (NPS)

Contributions to NPS are eligible for tax deductions under Section 80CCD(1B) over and above the limit of Section 80C. Additionally, taxpayers can claim an additional deduction of up to ₹50,000 under this section.

“For saving further tax, you can consider putting up to ₹50,000 annually in an NPS account to claim an exclusive deduction under Section 80 CCD(1B). This will take your deduction to ₹2 lakh,” said Mumbai-based tax and investment expert Balwant Jain.

2) ELSS Funds

An Equity-Linked Savings Scheme (ELSS) is a popular tax-saving option under Section 80C of the Income Tax Act, offering a lock-in period of three years. ELSS provides the dual benefit of tax deductions and the potential for capital appreciation. Investments up to ₹1.5 lakh are eligible for tax deduction under this scheme.

3) Public Provident Fund (PPF)

PPF is a small saving scheme with an investment tenure that will suit long-term programs. It's a government-backed scheme that enjoys an exempt-exempt tax benefit. The amount invested, interest earned, and withdrawals on maturity are tax-free. An individual gets a tax deduction under Section 80C.

4)Tax-saving fixed deposits

These are suitable for seniors and also risk-averse investors. An individual gets a tax deduction under Section 80C for investment in tax-saving FDs, which have a tenure of 5 years.

5) Health insurance

Section 80D allows deductions for health insurance premiums, with the following limits:

• Up to ₹25,000 for self, spouse, and children.
• An additional ₹25,000 for parents below 60 years.
• ₹50,000 if parents are senior citizens (above 60 years).

It's critical to understand tax-saving options that fit your risk tolerance and financial objectives, such as 80C investments in PPF, income tax-saving FDs, and ELSS, as well as possibilities outside of 80C, including health insurance and charitable contributions.

Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.