Paying more tax than necessary?:How to choose the right tax regime and avoid 7 common mistakes to save more

Many taxpayers feel they are paying more tax than they should while filing their ITR (Income Tax Return). In most cases, the problem is not higher income but lack of proper tax planning and awareness. Financial experts say many people either fail to select the right tax regime or do not fully utilise the exemptions and deductions available to them. As a result, they end up paying more tax unnecessarily. With better information and timely planning, taxpayers can significantly reduce their tax burden and maximise savings. In today’s Your Money column, we explain the basics of tax planning and highlight common mistakes that can increase your tax liability. The report will also cover: Q: How to know if we are paying more tax than necessary? Ans: For this, you need to understand your tax calculation and planning carefully. First, understand your income and tax slab. Check all deductions and exemptions. To do this, do the following- If you have not claimed all deductions, not chosen the right regime and not reported the correct income, it means you are paying more tax than necessary. Q: Which mistakes cause our tax liability to increase? Ans: The biggest reason for higher tax is wrong planning or negligence. People often make these mistakes- Q: If you want to save tax, what basics are necessary to understand? Ans: If tax basics are clear, then you can easily reduce tax liability. Let’s understand its basics- What is Taxable Income? What is the difference between Deduction and Exemption? What is the difference between Old and New Tax Regime? How do tax slabs work? Is timely planning necessary? Q: How to understand whether New Regime is better for you or Old? Ans: If you make investments and tax savings, then Old Regime is better. If you don’t, then choosing New Regime is better. Choosing a regime according to income is a difficult task, but we are explaining it in a simpler way. Q: What common mistakes do people make while paying taxes? Ans: Small mistakes while filing taxes can also lead to higher taxes or penalties. Generally, people make these mistakes- Q: Which tax saving schemes can one invest in? Ans: There are several schemes to save tax where you get both deduction on investment and interest. You can choose them according to your goals and risk- Q: What all can be claimed under 80C? Ans: Under Section 80C, you can save tax on income up to Rs 1.5 lakh annually. This includes several investments and expenses. Q: Can we save tax through health insurance as well? Ans: Yes, by taking health insurance you can save tax and also get protection from medical expenses. Q: How can tax be saved through HRA and rent? Ans: If you live in a rented house and receive HRA (House Rent Allowance) in your salary, then that entire portion is not taxable. This means you can save tax on it. How is HRA tax exemption determined? The exemption available on HRA is the lowest of the 3 points given below- The total HRA you receive from the company is of your basic salary- Q: Do NPS and home loan provide more tax benefits? Ans: Yes, NPS and home loan are options through which you can get additional tax exemption apart from 80C. First understand 80C- Now understand NPS- Total Benefit 1.5 lakh (80C) + 50,000 (NPS) = Tax exemption up to 2 lakh rupees can be availed. How Does Home Loan Save Tax? Home loan provides benefits in two places-