PPF to EPF: Best tax-saving investments for people opting for old regime

The regime allows taxpayers to claim deductions on various investments and expenses, which can significantly lower their taxable income

The March 31 deadline for declaring investments that save taxes is approaching and people who have opted for the old tax regime have to make their strategy. With less than six weeks remaining in Financial Year 2024-25 (FY25), it is crucial for taxpayers to explore various options available under the Income Tax Act, particularly Sections 80C, 80D, and others, to effectively reduce their tax liabilities.

 

Budget 2025 has retained slabs under the old tax regime and had no changes for FY26.

 

Slabs under the old tax regime:

 

Income up to Rs 2,50,000: No tax

 

Income from Rs 2,50,001 to Rs 5,00,000: 5 per cent

 

 

Income from Rs 5,00,001 to Rs 10,00,000: 20 per cent

 

Income above Rs 10,00,000: 30 per cent

 

The old tax regime also allows for various deductions.

 

Ritika Nayyar, partner at Singhania & Co. (a law firm), explained tax-saving options people can explore:

 

Section 80C: This is the basic and primary investment options for tax savings. When one invests across these eligible options, you are eligible for a deduction of Rs 1.5 Lakh (maximum limit , all taken together) from your taxable income. Options are:

 

Public Provident Fund (PPF): They offer a safe, long-term investment with a 15-year lock-in. Alternatively, Equity Linked Savings Scheme (ELSS) mutual funds provide the potential for higher returns, but with a shorter 3-year lock-in.

 

Employee Provident Fund (EPF) is usually a mandatory contribution for salaried employees and a great investment for your retirement security.

 

Life insurance premiums qualify for deduction under 80C, securing your family's future. Another option is Sukanya Samriddhi Yojana which is a dedicated savings scheme for your girl child.

 

For homeowners on a home loan, repaying the principal of your home loan also falls under Section 80C, offering tax benefits while building your asset.

 

Section 80D: Investing in comprehensive health insurance for yourself, your spouse, children, and parents can help you get a deduction up to Rs 25,000 for individuals below 60, and up to Rs 50,000 for senior citizens. This is not only an effective tax saving tool but also covers you from unexpected medical expenses.

 

Section 80E: If you have taken an education loan for yourself, your spouse or children, the interest you pay on that loan is fully deductible under Section 80E.

 

Section 80G: Donations to eligible charitable institutions and funds can claim a deduction under Section 80G. The amount deductible depends on the recipient organisation, so one must check the details before donating.

 

Section 80CCD(1B): One can also consider contributing to the National Pension System (NPS). With this you can claim an additional deduction of up to Rs 50,000 under Section 80CCD(1B). This is over and above the Rs 1.5 lakh limit of Section 80C.