Tax-saving strategies can be complicated, so navigating them requires diligence and knowledge of available deductions and exemptions. Financial planning can be optimized and tax liabilities can be greatly reduced by making well-informed decisions. You can save a significant amount of money come tax season by claiming all the benefits and deductions to which you are entitled by being aware of these pitfalls.
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The Income Tax Act provides taxpayers with a number of options, including Section 80C, which allows deductions for investments made in funds managed by PPF, ELSS, NSC, and EPF.
But ignoring them or not grasping their subtleties can result in lost chances and increased tax liabilities. As a result, in order to take advantage of these tax-saving opportunities, taxpayers must be knowledgeable and proactive.
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Not taking advantage of the Public Provident Fund (PPF), Employee Provident Fund (EPF), National Savings Certificate (NSC), Equity Linked Saving Schemes (ELSS), and other tax-saving investment options provided by sections 80C of the Income Tax Act. You lose out on substantial tax savings if you don’t utilize these deductions up to the maximum permitted amount, which is currently Rs 1.5 lakh annually.
Subject to specific requirements, if you are a salaried individual receiving HRA as part of your salary, you may be eligible for a rent exemption. You may lose out on this important tax-saving opportunity if you don’t give your employer the required paperwork or rent receipts.
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Section 80D allows for the deduction of premiums paid for parents, children, spouses, and self-only health insurance policies. Tax obligations may increase if this deduction is not taken advantage of. Senior citizens can also receive larger deductions under this section.
In excess of the Section 80C limit, contributions made to NPS are eligible for tax deduction under Section 80CCD(1B). Failure to take advantage of this extra deduction may cost you money in taxes and a significant window of time for retirement planning.
Waiting around costs money! Don’t put off investing for tax benefits until March. Spreading your investments out over the year and possibly earning more tax-free interest is possible when you plan ahead.
