Old tax regime: One of the most valuable deductions available under the Old Tax Regime is Section 80C, which allows taxpayers to claim deductions of up to Rs 1.5 lakh per financial year.
Old tax regime: The financial year 2024-25 is nearing its end, and taxpayers under the old tax regime have only a few weeks left to make eligible investments to claim deductions. To avail of these tax-saving benefits for this fiscal year, all investments must be completed by March 31, 2025. These deductions are not available under the new tax regime, which offers lower tax rates but fewer exemptions.
One of the major advantages of the old tax regime is the House Rent Allowance (HRA) exemption under Section 10(13A), which helps salaried individuals significantly reduce their taxable income. This exemption, however, is not applicable in the new tax regime. Another key benefit is under Section 80C, which permits deductions of up to Rs 1.5 lakh annually. Let’s look at some of the savings schemes that offer tax benefits under Section 80C.
Tax-saving schemes under Section 80C
- Public Provident Fund (PPF): The Public Provident Fund (PPF) is a widely preferred long-term savings option that offers completely tax-free returns. Investors can contribute between Rs 500 and Rs 1.5 lakh per financial year. Contributions to a PPF account are eligible for tax deduction under Section 80C, and both the interest earned and the maturity proceeds are exempt from tax. For the January–March 2025 quarter, the PPF interest rate has been set at 7.10 per cent per annum.
- Employee Provident Fund (EPF): A compulsory savings plan for salaried individuals, where both employee and employer contribute a portion of the salary. The employee’s share is eligible for tax deduction under Section 80C, and the employer’s contribution is non-taxable.
- Sukanya Samriddhi Yojana (SSY): A savings scheme specifically created for the financial well-being of a girl child under 10 years of age. With a high interest rate of 8.20 per cent and long lock-in period, it’s a popular choice due to its tax benefits on both investments and earnings.
- Senior Citizen Savings Scheme (SCSS): Tailored for individuals aged 60 and above, this scheme offers a secure investment with a high interest rate (currently 8.20 per cent) and provides tax exemption on interest income up to Rs 1.5 lakh.
- National Pension System (NPS): A government-backed pension scheme offering market-linked returns, tax advantages on contributions, growth, and maturity. It is suitable for those aiming for long-term retirement savings.
- Equity-Linked Savings Scheme (ELSS): A mutual fund-based tax-saving investment that combines equity exposure with Section 80C benefits. It has a shorter lock-in period of three years, making it one of the more flexible tax-saving options.
- Tax-Saving Fixed Deposits (FDs): These are five-year term deposits that qualify for tax deductions under Section 80C. While returns are fixed and low-risk, the interest earned is subject to taxation.
Also Read: Stock market opens in green as Sensex, Nifty record marginal gains in early trade
Also Read: Hotel body urges central govt to delink food and beverage GST rates from room tariffs, here’s why
