March 31 Deadline: Final Chance to Maximize Tax Savings for FY 2024-25

​With the end of the financial year 2024-25 and its closing date of 31st March 2025, taxpayers in India are rushing to make the deadline to finalize their investments in tax saving instruments. For people looking to pay their taxes and maximize their financial standing, this is an annual deadline. 

Tax planning must be taken up strategically before this cutoff because it does not only assist in tax compliance but also sets you in good stead towards your long-term financial goals. Eligible jurisdictions allow taxpayers to proactively invest in investment schemes, thereby cutting down the taxable income, effectively earning more out of their earnings and investment in the long run. However, with little time left to go, the urgency to act is stressed, and people are advised to evaluate their financial portfolios and make timely investment decisions.​

Key Tax-Saving Instruments Under Section 80C

The deductions up to ₹1.5 lakh annually are permissible under Section 80C of the Income Tax Act. Notable investment options include:​

• Public Provident Fund (PPF): A government-backed savings scheme offering tax-free returns with a 15-year maturity period.​
• National Savings Certificate (NSC): A fixed-income investment with a five-year tenure, suitable for conservative investors.​
• KVP (Kisan Vikas Patra): The investor receives the double of the invested amount within almost 124 months with assured returns.​
• SSY Sukanya Samriddhi Yojana: For the girl child, the account offers very attractive rates of interest and tax benefits.​
• Senior Citizen Savings Scheme (SCSS): As the name suggest, it is for senior citizens above 60 who want regular income and tax benefits.​
• In the case of five year FDs, general individuals can draw interest of up to 8.6% and receive Section 80C deductions.

Investments in these instruments would have to be completed by March 31 to claim the deductions for FY 2024 25. ​

Equity-Linked Savings Schemes (ELSS)

Section 80C tax benefits are offered with a lock-in period of three years and they are in the form of ELSS mutual funds. Compared to traditional tax saving instruments, they offer the scope for providing higher returns to the investor; therefore, these instruments are more suited for an investor with higher risk appetite. ​

National Pension System (NPS)

Under Section 80C, Section 80CCD(1) allows deductions of NPS within the overall limit. Moreover, an additional deduction to the extent of up to ₹50,000 is available under Section 80CCD(1B) and hence, NPS becomes a good option for retirement planning. 

Unit Linked Insurance Plans (ULIPs)

At the outset, ULIPs offer tax benefits as per the deductions available under Section 80C. Given the potential market linked returns and life cover, they are a solution to one’s long term financial goals. 

Health Insurance Premiums

Section 80D allows for deduction of premiums paid for health insurance policy. Deductions up to ₹25,000 are available to the taxpayers if they have paid premiums for self, spouse and dependent child and an additional ₹25,000 is available for premium paid by the taxpayers for their parents not exceeding 60 years old. The deduction limit in case of senior citizen parents is ₹50,000. 

Updated Income Tax Return (ITR) Filing

Taxpayers will be allowed to file updated ITRs with respect to the assessment year 2023–24 till March 31, 2025, reducing the additional tax and interest on it by 25 percent. Once after this date, it will attract a 50% additional tax, thereby reiterating the need to comply at the right time. ​

What’s to note?

Now, with the March 31 deadline looming, taxpayers are urged to take a thorough overview of their finances and tax responsibilities. This also involves the evaluation of potential deductions, making all eligible investments, and dealing with any pending compliance matters. Proactive tax planning acts as a bedrock component to financial stability through the reduction of tax liabilities, higher investment returns, and increased wealth accumulation. 

Going to a qualified financial advisor can grant access to personalized insights and strategies that are relevant to an individual’s financial situation, while keeping in mind the tax saving needs for the immediate future and also the future financial goals. Therefore, by taking timely and informed actions, taxpayers with clear information can effectively manage the issues of tax planning, to ensure their financial well being in the years to come.​