Income Tax Deductions: As the March 31 deadline for FY25-26 approaches, taxpayers are rushing to make the most of last-minute opportunities to reduce their tax burden. Whether it’s booking losses through tax harvesting, completing pending tax-saving investments, or ensuring all sources of income are properly accounted for, a few smart moves now can lead to meaningful savings.
[1] Tax Harvesting Strategy
As the financial year draws to a close, investors are once again looking for ways to optimise their tax outgo before the March 31 deadline.
Tax harvesting, often referred to as tax-loss harvesting, involves selling investments that are currently at a loss to offset gains made elsewhere in the portfolio. By booking these losses before the end of the financial year, investors can reduce their overall taxable capital gains.
For instance, if an investor has made gains from selling certain stocks or mutual funds, they can sell underperforming assets to realise losses. These losses can then be set off against gains, thereby lowering the total tax payable.
According to an tax expert, investors can use tax harvesting to fully utilise the tax-free limit on long-term capital gains before the financial year ends.
“Tax harvesting for claiming initial Rs 1.25 lakh of tax-free LTCGs can be done by March 31. If you book higher LTCGs, you will have to pay tax at a flat rate of 12.5% on the remaining amount,” he told Moneycontrol.
[2] Complete All Tax-Saving Investments
If you are in the old tax regime, ensure you have fully utilised deduction limits:
- Section 80C (Rs 1.5 lakh limit)
- Section 80CCD(1B) (NPS additional Rs 50,000)
- Section 80D (health insurance)
Many taxpayers rush into last-minute ELSS or insurance purchases, ensure these align with your financial plan, not just tax-saving.
[3] Dividend & Interest Income Reconciliation
Dividend income is taxable at slab rates, and interest income from FDs, savings accounts, or bonds is often underreported.
Before March 31, estimate total income from dividends, bank interest, and corporate bonds/ debentures.
[4] Donations Before Deadline
Donations under Section 80G must be completed before March 31 to be eligible.
Ensure payments are made through banking channels and proper receipts are collected.
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