Effective Ways to Reduce Income Tax in 2024

As the new fiscal year draws near, it's time to prepare ahead for taxes and consider wise strategies for lowering your tax liabilities. Making the best financial decisions while following the law is made easier when you understand the subtleties of tax-saving solutions. In order to help you become an expert tax saver and reduce your income tax liability in 2024, we'll go over seven practical strategies in this blog post.

Utilize 80C Deductions:

The 80C provision offers a variety of strategies to reduce your tax burden. It is advisable for you to consider investing in Equity Linked Savings Schemes (ELSS) in addition to the mandatory deductions like Provisional Fund contributions. With a minimum lock-in duration of three years, ELSS offers the potential to generate substantial returns, mostly from investments in equities.

Maximize 80CCD(1B) Benefits:

Funds contributed to the National Pension System (NPS) may yield additional benefits.

Further tax benefits on investments made in the National Pension System (NPS) are permitted under Section 80CCD(1B). If you donate INR 50,000 to NPS, you are eligible for an extra deduction of up to INR 15, 000. By exposing investors to a mix of government, corporate, and equity bonds, NPS investments provide a well-rounded portfolio for long-term wealth building.

Leverage 80D for Medical Expenses:

It's important to safeguard both your finances and your health. Make sure you get a full health insurance

package to go along with any possible employer-provided coverage. Personal health insurance provides financial stability during difficult times by protecting against unexpected medical bills, in addition to its tax benefits.

Examine 80G for Donations to Charities:

Giving to nonprofit groups is not only a great deed but also entitles you to tax deductions under section 80G. You may lower your taxable income and benefit society at the same time by giving to qualified charities.

Maximize Capital Gains Income:

Tax obligations can be reduced by carefully extracting Long Term Capital Gains (LTCG) from equity assets. Your annual withdrawal of INR 1 lakh will allow you to take advantage of lower tax rates and eventually enhance your tax efficiency.

Maximize Tax Benefits by Investing in Your Parents:

There are more ways to save taxes, such as transferring money to parents and investing in their names. Investing on behalf of non-earning spouses or minors allows you to take advantage of relevant exemptions and maximize your tax planning techniques.

Utilize HUF for Tax-efficient Investments

Creating a Hindu Undivided Family (HUF) can be a tax-efficient way to handle a variety of revenue streams, including as gifts, real estate, businesses, and capital gains. Your overall tax situation can be maximized by making use of the deductions and exemptions granted to HUF entities.