How to save tax in AY 2023-24?

Introduction

As we are in the end of the year and only few days left in the month of December, let us get to learn about “How to save tax in AY 2023-24”. There would be many already aware of the tax-saving deductions, But, for those still unaware, here is the tax-saving guide you must go through to save income tax in AY 2023-24.

Consume tax benefits by availing income tax deductions which we will be discussing in detail.

Before diving into the topic of how to save income tax in AY 2023-24, you should be aware in order to save tax from being paid to the government, get consultation from a Tax Consultant. Doing so, will allow you to stay tension free as the professional shall insure that your tax is saved to the max.

Hence, If you have a tax consultant there at your side, you will definitely be able to enjoy all the deductions under Income Tax. Let us now come to the point and discuss about as how to save tax in India.

Deductions for tax saving (AY 2023-24)

1. Section 24

Deduction on Home Loan

There are two sub-sections under Section 24. Under Section 24(a) standard deduction of 30% is provided on the annual value of the house property. In addition to it, Section 24 (b) provides interest on borrowed capital (Rs.30,000/Rs.2,00,000 subject to certain conditions). This deduction is provided against the “Income earned from house property”. The rental income on let-out property and the annual value of a property which is deemed to be let out for income tax property and the annual value of a self-occupied property being NIL shall be granted deduction under it. So, if you buy a home loan, do remember to claim the deduction under Section 24.

It illustrates, if you buy a home loan, you will be granted a deduction of home loan up to Rs. 2,00,000. However in some cases, Rs. 30,000 deduction is provided.

2. Section 80C

Save your Income tax by investing in the below-mentioned items.  You can claim deduction up to Rs. 1.5 lakh per year

• Life Insurance Premium Policy
• Employee’s Provident Fund Scheme
• Public Provident Fund Account
• Recognized Provident Fund
• Approved Superannuation Fund
• Sukanya Samriddhi Account Scheme
• National Saving Certificates
• Unit linked Insurance Plan for UTI
• LIC Mutual Fund
• National Housing Bank
• Tuition fees for full-time education
• Certain payment for purchase/construction of residential house property
• Subscription to notification bonds issued by NABARD
• Deposit in an account under Senior Citizen Savings Scheme Rules, 2004
• Term deposit for a fixed period of not less than 5 years in Scheduled Bank
• 5-term deposit under Post Office Time Deposit Rules, 1981

Given that a deduction of Rs. 1.5 Lakh shall be allowed if you invest in any of the scheme mentioned under Section 80C.

3. Section 80 D : Claim Deduction for Medical & Health Insurance

Section 80D of the Income Tax Act states that a person can claim a deduction on health insurance premium and expenses incurred towards preventive health checkup for self, spouse, dependent children, and parents.

In case of an Individual, the deductions given is as follows:-

1. For self, spouse and dependent children 25,000 if the person insured is a senior citizen. Here, senior citizen is referred to as an individual who is a Resident of India (ROI) age sixty years or more at any time during the relevant previous year.
2. Section 80D also provides for parents of the assessee, an additional deduction of 25,000 (Rs. 50,000 if the person insured is a senior citizen)
3. Medical expenditure if no amount is paid in respect of health insurance Rs 50,000 (only in case of senior citizens)

Note:- aggregate amount of deduction, in any case, cannot exceed Rs. 1,00,000.

In the case of a Hindu Undivided Family (HUF), allowed deductions are :-

1. The premium of 25,000 on medical insurance is paid of any member of the family (Rs. 50,000 if member insured is a senior citizen)
2. Medical expenditure if no amount is paid in respect of health insurance 50,000 (only in case of senior citizen)

Note:- aggregate of the deduction allowed cannot exceed Rs.50,000 in any case.

4. Section 80E : Deduction for Interest on Education Loan

It is granted if taken for *higher studies. You can claim a deduction under section 80E for a maximum of 8 years. This section relates to the amount paid out of income chargeable to tax by way of payment of interest on loan taken from a financial institution/ approved charitable institution for pursuing higher education.
Th term “higher studies” include study pursued after passing the Senior Secondary Examination or its equivalent from any school. Moreover, board or university recognized by the Central Government or State Government or local authority or by any authority authorized by the Central Government or State Government or local authority to do so.

All in all, if you get an education loan of higher studies, you will be eligible for maximum deduction of Rs. 40,000.

5. Section 80G: Donation

 Amount of sum paid by the assessee, being a company in the previous year as donations to the Indian Olympic Association or to any other association or institution established in India, as the Central Government may state to fund for :-

1. the development of infrastructure for sport and games; or
2. the sponsorship of sports and games in India shall be granted the deduction under Section 80G.

Under Section 80G, donation is either granted fully or partially. Read below and know in what cases partial deduction is granted and when full deduction is granted.

a) 100% deduction is allowed if donation is made to

• National Defence Fund set up by the Central Government
• Prime Minister’s National Relief Fund
• National Foundation for Communal Harmony
• National Sports Fund  or National Cultural Fund

b) 50% deduction is allowed when a person donates in any of the fund

• Jawaharlal Nehru Memorial Fund
• Prime Minister’s Drought Relief Fund
• Indira Gandhi Memorial Trust
• The Rajiv Gandhi Foundation

c) Contribution made to the below-mentioned are eligible for 100% deduction, however subject to 10% adjusted gross total income

• Government or any approved local authority, institution or association to be utilized for the purpose of promoting family planning
• Donation by a Company to the Indian Olympic Association or to any other notified association or institution established in India for the development of infrastructure for sports and games in India or the sponsorship of sports and games in India

d) Charity to following are eligible to a 50% deduction subject to 10% of adjusted gross total income

• Any other fund or any institution which satisfies the conditions mentioned in Section 80G(5)
• Government or any local authority to be utilized for any charitable purpose other than the purpose of promoting family planning
• An authority constituted in India for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages or both
• Corporation referred in Section 10(26BB) for promoting the interest of minority community
• For repairs or renovation of any notified temple, mosque, gurudwara, church or other places.

These are the five basic and most widely utilized deductions as given under Income Tax. Investing in any of it will allow you to claim a good deduction. Only 5 of them are stated as it is highly focused on as it gives the highest of deduction that one can easily claim.

Conclusion

Only the most popular deductions are mentioned above in the article on “How to save tax in AY 2023-24”. Though, there are more income tax deductions. To know more of the deduction which are bit complicated to understand, consult a professional. As we are in the end of the month, one must plan and save tax accordingly by taking help of someone good in it.
Do not forget to file your Income Tax Return, as these deductions can be claimed only if you file your ITR.  Stay careful.
I guess not only me, but each person on this planet would prefer to save more and more of taxes instead of paying it to the government. Thereupon, to know the strategies of saving tax in AY 2023-24, get us along. Contact EAdvisors and save tax on your income.
With the tax professional and good tax strategies, life would become easier and you will be able to save taxes more.