As the deadline for income tax returns (ITR) approaches, many taxpayers run to reduce their taxable income and maximize deductions.
Fortunately, there are several last-minute tax-saving strategies that you can use to lower your tax liability, even if you’re running short on time.
Whether you’re a salaried employee, a freelancer, or a senior citizen, these tax-saving tips are quick, easy to implement, and highly effective.
In this blog, we’ll walk you through the top last-minute tax-saving tips to help you save money and file your tax returns on time. These tips are practical, require minimal effort, and don’t involve long-term financial commitments or complex procedures.
1. Maximize Section 80C Deductions
One of India’s most popular ways to save on taxes is by claiming deductions under Section 80C. The total limit for deductions under this section is ₹1.5 lakh, and it covers a variety of investment options. If you haven’t fully utilized this limit yet, here’s how you can maximize your deductions:
Quick Investment Options for Section 80C:
- Employee Provident Fund (EPF): Check if your annual EPF contributions are at their maximum. If not, you can contribute additional funds before the end of the financial year to reduce your taxable income.
- Public Provident Fund (PPF): If you haven’t yet invested in a PPF account, consider making a lump-sum contribution before the deadline. This will help you claim the deduction under Section 80C while earning tax-free interest on your investment.
- Tax-Saving Fixed Deposits (FD): Another easy way to save taxes is by opening a 5-year tax-saving FD. You can do this quickly and claim the full ₹1.5 lakh deduction.
- National Savings Certificates (NSC): NSCs offer a secure way to save for taxes and provide a tax deduction under Section 80C. This can be a good option if you need to invest quickly.
Why These Are Effective Last-Minute Strategies:
These options are straightforward, don’t require lengthy procedures, and can be done quickly, making them perfect for last-minute tax planning.
2. Claim Health Insurance Premium Under Section 80D
Health insurance is essential for financial protection, but did you know it can also help you save on taxes? Section 80D allows deductions for premiums paid on health insurance for yourself, your spouse, children, and parents.
How to Use Section 80D to Save on Taxes:
- For Yourself and your Family: You can claim up to ₹25,000 as a deduction on premiums paid for your or your family’s health insurance. If you’re a senior citizen, this limit increases to ₹50,000.
- For Parents: You can also claim a deduction of up to ₹25,000 for premiums paid on your parents’ behalf (₹50,000 if they are senior citizens).
Last-Minute Tip: If you’ve not yet paid for health insurance premiums this year, you can immediately claim deductions before filing your tax return.
3. Donate to Charity (Section 80G)
Donations to charitable organizations not only help those in need but can also significantly reduce your taxable income. Section 80G allows you to claim deductions for contributions made to approved charities and relief funds.
How to Quickly Claim Deductions:
- Eligible Donations: Donate to a recognized charitable organization or a government relief fund before the filing deadline.
- Receipts Are Essential: Be sure to obtain proper receipts for your donations. Without these, you won’t be able to claim deductions.
Last-Minute Tip: Look for online platforms that make it easy to donate to charitable causes. This can be done in just a few clicks, and you can claim the deduction in the same tax year.
4. Pay Pending Tuition Fees for Your Children
Under Section 80C, you can claim deductions on tuition fees paid for your children’s education. This is a great way to save taxes, especially if you have pending tuition fees that need to be paid.
How to Utilize This Deduction:
- Tuition Fees: Payments made to educational institutions for your children’s tuition fees (up to ₹1.5 lakh limit under Section 80C) qualify for deductions.
- Eligible Institutions: Ensure that the educational institution is recognized and the payment is for regular education, not coaching classes or extracurricular activities.
Last-Minute Tip: If you have unpaid tuition fees, pay before the tax filing deadline to claim this deduction.
5. Contribute to the National Pension Scheme (NPS)
The National Pension Scheme (NPS) is another excellent way to save taxes while securing retirement. NPS contributions are eligible for deductions under Section 80CCD(1B), providing an additional ₹50,000 deduction beyond the ₹1.5 lakh limit of Section 80C.
Why NPS is a Good Last-Minute Tax-Saving Option:
- Extra Deduction: You can contribute up to ₹50,000 in NPS and claim an additional deduction, which is over and above the ₹1.5 lakh limit of Section 80C.
- Hassle-Free Process: The contribution process is quick, and you can do it online via the NPS portal or through your bank.
Last-Minute Tip: If you haven’t contributed to NPS this year, do so before filing your return. This is a great way to increase your tax savings without complex paperwork.
6. Claim Rebates Under Section 87A
Section 87A provides a tax rebate of up to ₹12,500 if your taxable income is less than ₹5 lakh. This is an automatic tax benefit and doesn’t require any investment or complex paperwork.
How to Claim This Rebate:
- Eligibility: If your taxable income after deductions is below ₹5 lakh, you are eligible for a rebate of up to ₹12,500 under Section 87A. No Extra Effort Required: This rebate is automatically applied when you file your return, so ensure your taxable income is correctly calculated.
Last-Minute Tip: If your income is close to the ₹5 lakh limit, consider optimizing your deductions to qualify for this rebate.
7. Home Loan – Claim Interest and Principal Deductions
For those who have taken home loans, there are tax-saving benefits under Section 24(b) for interest payments and Section 80C for principal repayments.
Home Loan Deductions:
- Interest Deduction: Under Section 24(b), you can claim up to ₹2 lakh deductions on home loan interest payments for a self-occupied property.
- Principal Repayment: The principal repayment can be claimed under Section 80C up to the ₹1.5 lakh limit.
Last-Minute Tip: If you haven’t yet made your home loan payment for the financial year, do so before the deadline to claim these deductions.
8. Interest on Savings Bank Accounts (Section 80TTA)
Do you have a savings account? If you’ve earned interest on your savings, you can claim a deduction under Section 80TTA of up to ₹10,000. This applies to interest earned on savings accounts held with a bank, post office, or cooperative society.
How to Claim Section 80TTA:
- Eligibility: The deduction is available for interest income up to ₹10,000 from savings accounts.
- Simple to Claim: The deduction is automatically applied when you file your ITR, provided you report your interest income correctly.
Last-Minute Tip: Ensure all your interest income is reported, especially if you have multiple savings accounts.
9. File a Revised Return (If Applicable)
If you’ve already filed your ITR but missed out on any deductions, you can file a revised return under Section 139(5) before the due date. This allows you to make corrections and claim missed deductions.
When to File a Revised Return:
- Correct Mistakes: If you’ve missed any deductions or made errors in your original return, file a revised return as soon as possible.
- Tax Benefits: This gives you a second chance to maximize your tax savings.
Last-Minute Tip: If you’ve overlooked any deductions, filing a revised return can be a great way to claim them before the deadline.
Take Action Today: Maximize Your Tax Savings Before the Deadline
As the tax filing deadline approaches, taking advantage of every available opportunity to reduce your taxable income is necessary. By implementing these last-minute tax-saving tips, you can minimize your tax liability without the stress of long-term commitments or complicated procedures.
Whether contributing to a PPF account, claiming health insurance deductions, or donating to charity, there are plenty of quick and accessible ways to save on taxes. Don’t let this year’s deadline pass you by—use these tips to ensure you’re not leaving any tax-saving opportunities on the table.
Remember, the key to successful tax planning is timely action. So, act now and reap the benefits of these simple yet effective tax-saving strategies!
