The start of the new financial year marks the beginning of tax planning for individuals and businesses. However, with the revised new income tax regime for FY 2023-24, tax planning becomes even more crucial. The new income tax regime, which limits tax deductions and exemptions, may have a significant impact on taxpayers’ finances.
To make the most of the new income tax regime, it is important to consider tax-saving instruments such as ELSS, PPF, NPS, and tax-saving fixed deposits. These instruments offer tax benefits and help reduce the taxpayer’s taxable income.
In addition to investing in tax-saving instruments, taxpayers can also make use of Section 80D, which allows for a deduction of up to Rs. 50,000 for medical insurance premiums paid for self, spouse, and dependent children. Taxpayers can also claim the increased standard deduction of Rs. 75,000 for salaried individuals in the new income tax regime.
Donations made to charitable causes are also eligible for tax benefits under Section 80G of the Income Tax Act. Taxpayers can donate to charitable causes they support and avail of tax benefits while also contributing to a good cause.
Moreover, taxpayers can plan their salary structure to maximize their tax benefits. Opting for tax-saving allowances such as conveyance, medical reimbursement, or LTA can help reduce taxable income.
However, it is important to note that tax-saving should not be the only consideration while planning finances. It is essential to diversify portfolios and consider investment goals, risk appetite, and investment horizon while choosing investment options. Consulting a financial advisor can provide valuable insights and help make informed investment decisions Tax planning for FY 2023-24 requires careful consideration of the revised new income tax regime’s implications. By investing in tax-saving instruments, making use of tax deductions and exemptions, and planning salary structures, taxpayers can reduce their taxable income and save on taxes.