Best ways to save your taxes in 2024

Seth Loyd while giving this statement was as accurate as he could be, “Nothing in life is certain except death, taxes, and the second law of thermodynamics”. Paying taxes, though unavoidable, really gets on our nerves. So, our minds wonder what the best ways could be to save taxes. What are the effective ways to minimize tax liabilities? How to make enlightened decisions about saving taxes and raising the standard of living? Don't worry we have got you covered. This blog is dedicated to making you aware of the best ways to save taxes in 2024.

Income Tax Act

Section 80C of the Income Tax Act is of sheer importance and knowledge of this is necessary before we tell you the best ways to save your taxes in 2024.

What does Section 80C of the Income Tax Act state?

Section 80C is what attracts the taxpayers amongst all the sections of the Income Tax Act as it permits taxpayers to minimize taxable income. You can do this by making certain investments or expenditures that are exempted from income tax by Section 80C of the Income Tax Act. A maximum deduction of up to 1.5 lakh is permissible every year. The exemption of taxes from some of the investments makes Section 80C extremely popular amongst taxpayers.

However, Section 80C is not the only best way to save your taxes in 2024. Believe it or not, there are almost a dozen other ways that could be regarded as the best ways to save your taxes in 2024! Let's go through some of them.

8 best ways to save your taxes in 2024

Who wouldn't want to save taxes? Every tax-paying individual once or twice in their lives googles “best ways to save taxes”. In this section, we have covered the 8 best ways to save your taxes apart from bringing Section 80C into use.

1. NPS

NPS- National Pension Scheme is one of the few best ways to save your taxes in 2024. But how can you achieve it? Investing in the National Pension Scheme is how you can achieve it. The question arises: who can invest in the NPS? Anyone in the age group of 18-70 years, public or private employee, resident or non-resident can become a part of the National Pension Scheme program.

Section 80CCD(2) of the Income Tax Act covers the contribution of an employer towards the NPS.

Section 80C of the Income Tax Act covers the tax deduction of ₹1.5 lakh for self-contribution to the National Pension Scheme under the old tax regime.

Section 80CCD(1B) of the Income Tax Act covers the additional deduction of ₹50,000 which is allowed if a contribution is made towards the NPS under the old tax regime.

2. HRA or House Rent Allowance

HRA- Housing Rent Allowance is undoubtedly one of the best ways to save your taxes in 2024. In the Housing Rent Allowance, there is a provision of exemption of taxes. But who can avail of this benefit?

• employees who live in a rented space
• employees who have chosen the Old Tax Regime
• employees who pay rent to the owners of their accommodation

How can HRA tax saving benefits be availed? Simply, the employees need to submit documents of the rent paid as proof while filing Income tax returns.

3. Life Insurance

Investment in Life Insurance is one of the best ways to save your taxes in 2024. Section 10(10D) of the Income Tax Act suggests this provision. Additionally, through tax deduction under Section 80C, exemption is provided for investment in life insurance. Investment in life insurance is eligible for a tax exemption of ₹1.5 lakh through Section 80C of the Income Tax Act. It is to be noted that this exemption provision is available to employees who have opted for the Old Tax regime. However, Section 10(10D) is available under both the Old Tax Regime and the New Tax Regime. If you are thinking of saving taxes in 2024, investment in Life Insurance can be your life saver!

4. ELSS

ELSS- Equity Linked Saving Scheme is another way that comes under the best ways to save your taxes in 2024. This provision is available under Section 80C of the Income Tax Act. A tax exemption of ₹1.5 lakh is permissible via Section 80C. Investment in the Equity Linked Saving Scheme is beneficial in several ways. The lock-in period of ELSS is 3 years. The investment is flexible through this scheme, making it a viable option for saving taxes.

5. PPF

PPF- Public Provident Fund scheme makes its way into the list of best ways to save your taxes in 2024. PPF is quite a popular term amongst taxpayers. It gains popularity from the fact that it is categorized as a tax exemption method. Under Section 80C of the Income Tax Act, investment in the Public Provident Fund is eligible for a tax exemption up to ₹1.5 lakh. Under Section 10 of the Income Tax Act, interest and maturity are relaxed from tax. The lock-in period of the PPF account is 15 years.

6. Education loan

In the process of repayment of education loans, students are provided an exemption from taxes. This provision is available under Section 80E of the Income Tax Act.

7. NSC or National Saving Scheme

NSC- National Saving Scheme is also counted as one of the best ways to save your taxes. The National Saving Scheme is an investment scheme particularly oriented towards small-income and middle-income investors. What makes NSC an attraction to investors is its low-risk factor. Under Section 80C of the Income Tax Act, investment in NSC is eligible for a deduction up to ₹1.5 lakh.

Key characteristics of NSC-

• Investments can be as low as ₹1000
• Tax exemption ₹1.5 lakh
• Guaranteed return of 6.8% annual interest

8. Medical Insurance

Medical Insurance is another great way to save taxes. Section 80D of the Income Tax Act provides for a deduction for medical insurance, provided he/ she opts for the Old Tax Regime. A benefit is included via this scheme, offering a preventive full body health check-up to ₹5000 inclusive.

Every taxpayer feels the pain of paying taxes. Hence the slightest exemption in tax payment excites a taxpayer. But how can one gain such exemptions is a crucial question that has been briefly discussed in this blog. Some of the best ways to save your taxes have been mentioned above, including Section 80C of the Income Tax Act. PensionBox attempts to provide our readers with the best ways to save your taxes in 2024 so that they can make informed decisions as taxpayers and make the best use of the opportunities available.