The calendar year 2025 has begun and the financial year 2025 is set to end in three months. However, taxpayers can still invest in a slew of tax-saving schemes that enable them to claim tax exemptions for fiscal 2024-25.
So, it is vital to note that the investment must be made in the same financial year in which you are set to claim the tax exemption.
To claim the exemption in 2024-25 for which you will file the income tax return (ITR) before July 31, investment must be made in the financial year which will end on March 31, 2025.
Let us explore more on the investment instruments wherein one can invest for the purpose of saving income tax:
1. Tax saving under 80C: Taxpayers can invest in a range of instruments such as National Savings Certificate (NSC), ULIP (Unit-linked insurance premium), and PPF (public provident fund) to claim income tax exemption under 80C. The maximum tax exemption limit is ₹1.5 lakh.
2. Tax saving under 80CCC: This section allows for annual deductions of up to ₹1.5 lakh for contributions made by an individual to designated pension plans provided by life insurance.
3. Tax saving under 80CCD (1): Section 80 CCD (1) permits every taxpayer to claim tax deductions from the amount you deposit in your NPS account. The maximum limit of deductions under this clause is capped at ₹1.5 lakhs for a given financial year.
It is noteworthy that the maximum deduction under Section 80C, 80CCC and 80CCD(1) put together is ₹1.5 lakhs
4. Tax saving under 80D: A taxpayer can claim a tax deduction on premiums paid towards medical insurance for self, spouse, parents, and dependent children under section 80D of the Income Tax (I-T) Act, 1962.
The maximum limit is ₹25,000 for a regular citizen and ₹50,000 for a senior citizen in a financial year.
5. Tax saving under 80CCD (1B): This section allows an additional deduction of up to ₹50,000 for contributions made to NPS, over and above the deductions available under Section 80 CCD (1).
Income Tax: New tax regime
It is important to note that taxpayers must opt for the old tax regime in order to claim tax exemptions since most of these exemptions are not allowed in the new regime.
Meanwhile, there are a few tax exemptions which are still allowed in the new tax regime. These include contributions made to Agniveer Corpus Fund (80CCH) and standard deduction (up to ₹75,000).