Ways to Save Income Tax in the Old Tax Regime for FY 2024-25 and FY 2023-24

In the old tax regime, taxpayers can avail themselves of several deductions and exemptions to reduce their tax liability. Here are key sections and provisions that help save income tax under the old tax regime for FY 2024-25 and FY 2023-24:

Section 80C: Income Tax Deduction for Investments

Exemption Limit: Up to ₹1,50,000/-
Under Section 80C, the Income Tax Act provides tax-saving benefits for investments in various instruments. These include life insurance premiums, public provident fund (PPF), employees provident fund (EPF), and more. By making these investments, taxpayers can reduce their taxable income by up to ₹1.5 lakh annually.

Eligible Instruments for Deduction:

• Life Insurance Premium
• Public Provident Fund (PPF)
• Employees Provident Fund (EPF)
• Equity Linked Savings Scheme (ELSS)
• Unit Linked Insurance Plan (ULIP)
• Tax Saver Fixed Deposits
• National Pension Scheme (NPS)
• Home Loan Principal Repayment
• Sukanya Samriddhi Yojana
• Senior Citizens Savings Scheme
• National Savings Certificate

However, it’s important to note that tax-saver fixed deposits must have a 5-year lock-in period to qualify for the deduction.

Section 80CCD: Deduction for Contributions to NPS

Exemption Limit: ₹50,000
Contributions made to the National Pension Scheme (NPS) qualify for an additional deduction of up to ₹50,000 under Section 80CCD(1B). This is over and above the ₹1.5 lakh limit available under Section 80C, offering additional tax benefits while saving for retirement.

Section 80D: Deduction for Health Insurance Premiums

Exemption Limit:

• Up to ₹25,000 for self and family
• Up to ₹50,000 for self and family + parents
• Up to ₹75,000 for self and family (below 60 years) + parents above 60 years
• Up to ₹1,00,000 for self and family (with members above 60 years) + senior citizen parents

Health insurance premiums are deductible under Section 80D. The deduction varies based on the taxpayer’s age and the age of their parents.

Section 80DD: Deduction for Medical Treatment of Disabled Dependents

Exemption Limit:

• ₹75,000 for disability between 40% and 80%
• ₹1,25,000 for disability above 80%

Taxpayers can claim deductions for medical expenses incurred for the treatment, training, and rehabilitation of a dependent with a disability.

Section 80DDB: Deduction for Treatment of Specified Diseases

Exemption Limit:

• ₹40,000 (₹1,00,000 for senior citizens)
  Section 80DDB provides deductions for medical expenses incurred on specified diseases for the taxpayer or their dependents. This provision offers a higher deduction for senior citizens.

Section 80E: Tax Deduction for Education Loan Interest

Exemption Limit: No limit
Under Section 80E, taxpayers can claim a deduction for interest paid on loans taken for higher education. The loan can be for the taxpayer, spouse, children, or a legal guardian’s child.

Section 80EE: Deduction for Home Loan Interest for First-Time Homebuyers

Exemption Limit: Up to ₹50,000
This deduction is available to first-time homebuyers who have taken a home loan. The home loan must be sanctioned between April 1, 2016, and March 31, 2017, and the property value should not exceed ₹50 lakh.

Section 80G: Deduction for Donations to Charitable Institutions

Exemption Limit: No limit (conditions apply for cash donations)
Donations made to approved charitable organizations qualify for tax deductions. There is no limit for donations made digitally, but cash donations are limited to ₹2,000 per year.

Section 80GG: Deduction for Rent Paid (without HRA)

Exemption Limit: The deduction is the least of the following:

• Rent paid minus 10% of total income
• ₹5,000 per month
• 25% of total income

If you do not receive House Rent Allowance (HRA) from your employer, this deduction allows you to claim tax relief on the rent paid for your accommodation.

Section 80TTA: Deduction on Interest from Savings Accounts

Exemption Limit: ₹10,000
Individuals can claim up to ₹10,000 as a deduction on interest earned from savings accounts. This applies to savings accounts with banks, cooperative societies, and post offices.

Section 80U: Tax Deduction for Individuals with Disabilities

Exemption Limit:

• ₹75,000 for disability between 40% and 80%
• ₹1,25,000 for disability above 80%

Individuals with disabilities can claim deductions based on the severity of their condition. This deduction provides relief by reducing the tax burden for those with physical or mental disabilities.

Section 80RRB: Tax Deduction for Individuals with Income from Patents

Section 80RRB of the Income Tax Act provides a tax deduction on income earned from patents. If a taxpayer holds a patent, the income received by way of royalties from the patent is eligible for a deduction under this section.

Key Points:

• Deduction Limit: Up to ₹3,00,000 per year.
• Eligible Income: Royalties or lump-sum payments received from the use of patents registered in India.
• Conditions:
  • The patent must be registered in India.
  • The taxpayer must be the original holder of the patent.
  • The deduction is available only on the income earned from the patent (not on the sale of the patent itself).
  • This section is applicable to individuals, Hindu Undivided Families (HUFs), and firms.

This provision encourages innovation and rewards individuals or entities who contribute through patents by providing a tax benefit on the income derived from such intellectual property.

Section 24(b): Deduction on Home Loan Interest

Exemption Limit: Up to ₹2 lakh for self-occupied properties
Home loan interest paid for the purchase, construction, or renovation of a home is deductible under Section 24(b). This applies to both self-occupied and rented properties.

By making use of these deductions and exemptions, taxpayers in the old tax regime for FY 2024-25 and FY 2023-24 can significantly reduce their taxable income, leading to savings on their income tax liabilities. Ensure that all applicable deductions are claimed in a timely manner to maximize tax benefits.