If you’re also a tax payer then today’s article is just for you. Tax planning plays a crucial role in your overall financial strategy. When creating your tax plan, it’s essential to consider how to maximize tax benefits, such as exemptions, while minimizing your tax obligations. This planning process takes into account various factors, including your income, expenses, investments, and other financial activities that could lead to tax savings.
The main objective of tax planning is to devise a strategy that allows you to pay the least amount of tax possible by utilizing available deductions and credits. It is a vital aspect of personal finance, aimed at reducing the tax burden on individuals while adhering to legal regulations.
Planning for the 2025-26 assessment year requires awareness of the changes implemented in 2024. This knowledge will significantly aid your tax planning efforts for 2025. One effective strategy is tax loss harvesting, where you sell securities at a loss to offset capital gains from other investments, ultimately lowering your tax bill. This approach can help mitigate the impact of losses and provide ongoing tax benefits, potentially leading to substantial long-term gains with exemptions of up to one to one and a quarter lakh rupees on capital gains.
You can also reduce your taxable income under Section 80C of the Income Tax Act. By investing in options like PPF, insurance premiums, five-year fixed deposits, equity-linked savings schemes, and unit-linked insurance plans, you can claim a tax deduction of up to Rs 1.5 lakh. Additionally, contributions to the NPS can provide an extra tax exemption of Rs 50,000.
For those under the New Tax Regime, the increase in the standard deduction from Rs 50,000 to Rs 75,000 will be advantageous for salaried individuals. If your tax liability exceeds Rs 10,000, timely payment of advance tax can also help you avoid penalties and other charges.
