ITR filing 2025: As the end of the fiscal year 2024-25 approaches, taxpayers adhering to the Old Tax Regime should note the critical deadline to maximise their tax-saving opportunities. Investments need to be completed by March 31, 2025, to claim tax exemptions for FY25, a privilege not available under the New Tax Regime. The old tax system allows exemptions like House Rent Allowance (HRA) under section 10(13A) for salaried individuals, offering a significant reduction in taxable income. This exemption is notably absent in the new tax format, which has become the default scheme and provides no provisions for similar deductions or exemptions.
The Old Tax Regime offers multiple avenues for tax savings, prominently under Section 80C, which permits deductions up to Rs 1.5 lakh. Investors can diversify these investments across various options, including Equity-Linked Savings Scheme (ELSS), Sukanya Samriddhi Yojana (SSY), Public Provident Fund (PPF), National Savings Certificate (NSC), Senior Citizen Savings Scheme (SCSS), life insurance, Kisan Vikas Patra (KVP), and post office term deposits. Each of these instruments is designed to encourage long-term savings while also providing immediate fiscal benefits. Importantly, these deductions are unavailable to those who have transitioned to the new tax regime.
Additionally, section 80D extends tax deductions for health insurance premiums, up to Rs 25,000 for general taxpayers and Rs 50,000 for senior citizens, alleviating the burden of personal and family health expenditures. For families supporting a disabled dependent, Section 80DD offers further income tax deductions on related expenses, contributing to the financial security of affected households.
Furthermore, section 80G allows taxpayers to deduct contributions made to approved relief funds and charitable institutions, providing an incentive for social responsibility. These provisions collectively underscore the comprehensiveness of the old regime in facilitating tax-saving while promoting socially beneficial practices.
The tax department has made available a tax calculator on its website to assist taxpayers in comparing the potential tax liabilities under both the old and new regimes. This tool is vital for individuals to make informed decisions about their tax strategies, particularly in differentiating the benefits of each regime. Specifically, the calculator helps taxpayers ascertain whether remaining in the old regime or transitioning to the new one yields better financial results, offering clarity on potential tax savings. Taxpayers are advised to utilise this tool to optimise their tax planning within permissible legal frameworks.
Taxpayers must be mindful of the specific thresholds that govern the allowable deductions, such as the Rs 1.5 lakh cap under Section 80C. Investments exceeding this limit do not contribute to further tax savings. Taxpayers must, therefore, carefully plan their investments to stay within these boundaries to fully leverage the tax benefits.
As the financial year concludes, those adhering to the old tax regime should prioritise finalising their investments to avail of these deductions, ensuring that they do not miss out on potential tax savings. This deadline underscores the importance of proactive financial planning and awareness of the benefits available under different tax structures.