Last-Minute Income-Tax-Saving Tips: Maximise These Deductions

Last-Minute Income-Tax-Saving Tips: Maximise These Deductions Before Financial Year-End----

As the financial year 2025-26 nears its end, it's wise to review your financial decisions. Ensuring that all eligible investments and tax-saving contributions are made by March 31 allows investors to claim maximum deductions and benefits when filing taxes for the current fiscal year. This can help investors reduce their overall tax liability.

In India, there are many options under the tax laws that offer deductions and exemptions to reduce taxable income. These include investments in Equity-Linked Savings Scheme (ELSS), Public Provident Fund (PPF), National Pension System (NPS), life insurance premiums, health insurance, and tuition fees, among other things.

Opting for such investment measures can help investors save money while complying with legal requirements.

Deductions Under Section 80C

Under the tax laws, investing in ELSS or PPF can help claim deductions under Section 80C for investors. Investments made in fixed deposits can also be claimed under this section. The law allows investors to claim overall deductions of up to Rs 1.5 lakh under this section.

Section 80CCD

Under Section 80CCD(1), an employee can claim deductions up to Rs 1.5 lakh on their own NPS contributions, including basic salary and DA. Section 80CCD(1B) provides an extra Rs 50,000 deduction exclusively for NPS. Section 80CCD(2) allows tax benefits on contributions made by the employer to the employee's NPS account.

Health Insurance Premiums

Investors in India can claim tax deductions on health insurance premiums under Section 80D. Individuals below 60 years can deduct up to Rs 25,000, while senior citizens can claim up to Rs 50,000. This includes premiums paid for self, spouse, children and parents, helping reduce taxable income.

Home Loan Interest

Under Section 24(b) of the Income Tax Act, investors can claim a deduction of up to Rs 2 lakh on annual home loan interest for a self-occupied property, with no limit for rented properties. Additionally, Section 80EEA allows first-time homebuyers who meet certain conditions to claim an extra deduction of up to Rs 1.5 lakh on home loan interest. The deductions for repayment of principal can be claimed under 80C.

Under Section 80G, donations to specified charitable institutions and funds are eligible for tax deductions.

To be clear, most of these tax deductions apply only under India's old tax regime. The new regime offers limited benefits such as deductions on interest on home loans for let-out properties under Section 24(b), employer contributions to NPS and a standard deduction of Rs 75,000.

Rs 1-Crore Goal: How You Can Begin Your Investments In New Financial Year

The beginning of a new financial year typically prompts households to reorganise their finances and set new priorities. Investors often use this period to outline long-term wealth targets. In India, one of the most common ambitions is to build a Rs 1-crore investment corpus over time.

Although the target may look ambitious, it is far from unattainable. Experts note that a well-defined investment approach combined with regular contributions can gradually build the desired corpus. Beginning early in the financial year and maintaining consistency are often seen as crucial steps.

Investing at an early stage provides a crucial advantage: compounding. Often described as the backbone of long-term wealth building, compounding ensures that returns earned on investments are reinvested and start generating further gains, gradually accelerating portfolio growth.

To reach a long-term target like Rs 1 crore, investors should consider diversifying their portfolio across different asset classes. A balanced mix can help generate stable returns while managing risk.

For investors looking to create wealth over the long run, equity mutual funds remain a popular option. Using SIPs, individuals can invest modest amounts regularly, enabling them to participate in market movements without needing large lump-sum investments.

The Public Provident Fund is a government-backed savings scheme that offers tax benefits and stable returns. It is suitable for conservative investors looking for safe long-term savings.

Gold has traditionally been an important part of Indian portfolios. While it may not generate very high returns, it can act as a hedge against inflation and market uncertainty.

Here are some calculations which show how to achieve a corpus of Rs 1 crore by investing in different instruments:

Investing In Mutual Fund SIPs

• Monthly investment: Rs 7,000
• Tenure: 15 years
• Total investment: Rs 12.6 lakh
• Expected rate of returns: 12%
• Estimated returns: Rs 20.72 lakh
• Maturity corpus: Rs 33.32 lakh

Investing In Gold

• Monthly investment: Rs 7,000
• Tenure: 15 years
• Total investment: Rs 12.6 lakh
• Expected rate of returns: 10%
• Estimated returns: Rs 15.51 lakh
• Maturity corpus: Rs 28.11 lakh

Investing In PPF

• Monthly investment: Rs 12,500
• Tenure: 15 years
• Total investment: Rs 22.5 lakh
• Expected rate of returns: 7.1%
• Estimated returns: Rs 16.95 lakh
• Maturity corpus: Rs 39.45 lakh

An important thing to note is that the higher the timeline over which you want to achieve your goal, the lower the monthly investment you will have to make.

The new financial year is the perfect opportunity to start fresh. By investing consistently, diversifying your portfolio and gradually increasing contributions, you can steadily move towards the Rs 1 crore milestone.

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