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Time of India
18 hours ago
- Business
- Time of India
No home loan deductions in new tax regime: Why prepayment makes sense & how it can help you save on interest outgo
Home loan tax benefits : With key tax incentives not available under the new income tax regime, many loan borrowers are reassessing home loan repayment strategies. Many borrowers are now favouring early prepayments to cut interest outgo and loan tenure. Tired of too many ads? go ad free now The old tax regime allows borrowers to claim deductions of Rs 2 lakh on interest under Section 24(b) and Rs 1.5 lakh on principal under Section 80C. The new income tax regime doesn't have these benefits, reducing the incentive to maintain long-term loans. 'While earlier tax deductions justified holding on to loans, the new tax structure weakens that logic as the cost has gone up,' said Amar Ranu, Head–Investment Product & Insights at Anand Rathi Shares and Stock Brokers, according to an ET report. Benefits of prepaying home loans Prepaying a home loan, especially in the early years, significantly reduces interest payments because EMIs are front-loaded—meaning most of the initial outgo covers interest. For instance, on a Rs 50 lakh loan at 8.5% for 20 years, borrowers would pay over Rs 48 lakh in interest. A Rs 5 lakh prepayment in the third year could shorten the tenure by 3–4 years and save up to Rs 12 lakh in interest, according to the ET analysis. When lump sum prepayments are not feasible, increasing EMIs gradually as income rises is an effective alternative. A 10% annual EMI increase can cut the loan term to under 10 years, while a 5% rise can bring it down to 12–13 years. Annual Increase in EMI Interest Saved (Rs lakh) EMIs Saved 5% 16.1 80 10% 22.2 109 15% 25.6 125 20% 27.9 136 Source: ET report A dual strategy of periodic prepayments and stepped-up EMIs yields maximum savings. This disciplined approach doesn't necessarily demand big sacrifices. Redirecting bonuses, maturing fixed deposits, life insurance proceeds, or funds from low-yield assets can help build a prepayment pool. Tired of too many ads? go ad free now 'Prepaying 5% of the loan every year is a sensible and manageable target,' said Ranu. While early repayment yields the most savings, it becomes less effective in later stages of the loan. Borrowers in the final years may be better off continuing with the loan—particularly if the interest rate is low or they have access to investments offering higher returns. 'Prepaying your loan is like saving money at the same rate as your loan interest. So, if your home loan rate is 8.5%, every rupee you prepay helps you avoid paying 8.5% interest on it, which is as good as getting a risk-free return of 8.5%,' said Vipul Patel, Founder of in the ET report. Experts also advise checking for hidden charges before prepaying, maintaining adequate emergency funds, and ensuring liquidity before committing excess cash to loan repayment. While markets may offer higher returns, prepayment guarantees fixed savings and peace of mind.
India Today
3 days ago
- Business
- India Today
Hiding income or making wrong claims? Your ITR could attract a 200% penalty
It's that time of the year again when taxpayers across the country start filing their Income Tax Returns (ITR). But hold on. If you're all set to hit submit, take a moment and double-check your return. Under the new ITR rules, even a small mistake or a false claim can lead to big a taxpayer hides actual income, a 200% penalty on the tax evaded is charged for misreporting. For underreporting, the penalty is 50% of the tax owed under Section 270A, as mentioned by serious? It is. That's why you need to be extra careful while filing your ITR, as even minor errors can result in significant financial consequences. Therefore, taxpayers must be vigilant and ensure all information is accurate to avoid hefty MISTAKES IN ITR FILING One of the primary areas of concern is the tendency of taxpayers to claim deductions under Section 80C without adequate proof or issues arise when taxpayers declare false House Rent Allowance (HRA) claims or list personal expenses as business expenses. Such practices can lead to severe penalties, regardless of the taxpayer's intentions or failing to report earnings from freelancing, crypto, or side jobs in your ITR may attract strict penalties. Make sure nothing is left PENALTIESTo avoid incurring penalties, taxpayers should ensure that all claims are backed by legitimate documentation. Mistakes made by a Chartered Accountant (CA) or consultant do not exempt taxpayers from liability. The law holds the taxpayer accountable, not the person who prepared the it is imperative for individuals to review their tax returns meticulously before submission. This proactive approach can safeguard against potential errors and subsequent penalties.- EndsTrending Reel
Time of India
18-06-2025
- Business
- Time of India
Income Tax Return e-filing: Can you keep switching between new and old tax regime every year? What taxpayers should know
The new income tax regime offers lower tax rates and higher standard deduction compared to the old tax regime. (AI image) ITR filing FY 2024-25 (AY 2025-26): When filing your income tax return every year, the choice between the old and the new income tax regime is an important one. The new income tax regime offers lower tax rates and higher standard deduction compared to the old tax regime. On the flip side, the old tax regime allows for popular deductions and exemptions like Section 80C, 80D, House Rent Allowance (HRA), Leave Travel Allowance (LTA) and more. As your financial situation evolves over years, you may find it beneficial to be in the old regime versus the new or vice-versa. What if you opted for the new tax regime last year, but realise that for this year's ITR filing the old tax regime results in lower tax outgo? A common question that taxpayers have is: can they choose between the new and old income tax regime every year, or is it a one time choice? Also Read | ITR filing FY 2024-25: Do you need to file your income tax return if TDS has been deducted? Explained Old vs New Tax Regime: Can you switch every year? According to Sudhakar Sethuraman, Partner at Deloitte India, the Income-tax Act, 1961 allows individual taxpayers (who do not have business income) to choose between the regular (old) and simplified (new) tax regimes each financial year. 'The choice of income tax regime is at the discretion of the individual and they can choose every year (provided they don't have business income) depending on what is beneficial for them,' he tells TOI. Sudhakar Sethuraman goes on to explain, 'Further, even if an individual had declared one tax regime to the employer for TDS purposes, he/she can change the choice of tax regime at the time of filing tax return (if he/she does not have business income).' It's important to note that the new income tax regime is now the default tax regime. In case you wish to file ITR under the old income tax regime, then you will have to opt for it. This can either be done at the start of the financial year by informing your employer, or at the time of filing the income tax return. Yet another fact that is of consequence is: you can opt for the old income tax regime at the time of ITR filing only if you file your tax return within the due date. Once the deadline to file ITR is crossed, you will automatically be switched to the new income tax regime. Also Read | ITR filing FY 2024-25: Several changes in Form 16! Top things salaried taxpayers shouldn't miss Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Hans India
12-06-2025
- Business
- Hans India
Know How to Secure Your Child's Future With NPS Vatsalya
Every parent dreams of giving their child the best possible future — quality education, financial independence, and a secure life. But with rising costs and economic uncertainties, securing that dream feels overwhelming. What if there were a simple, affordable way to start building a solid financial foundation for your child's future today? Enter NPS Vatsalya, a child-focused retirement savings scheme designed to help parents create a disciplined investment habit with long-term benefits. If you're wondering what NPS Vatsalya is and how it can make a difference in your child's life, this article is your easy-to-understand guide. Let's dive in! What is NPS Vatsalya, and Why Should You Care? NPS Vatsalya is a government-backed pension scheme for children under 18. Think of it as a long-term savings plan, but with a twist: it's not just about saving money—it's about growing it smartly, with tax benefits. Here's the simple catch: you open an NPS Vatsalya account in your child's name, start investing small amounts regularly, and the money grows over time with the power of compounding. Once your child turns 18, the account can be converted into a regular NPS account for them to manage on their own. Why Now is the Best Time to Start? Did you know the cost of higher education in India has increased in the last five years? According to a recent report by the Indian Ministry of Education, expenses related to professional courses, international degrees, and even day-to-day schooling are rising steadily. Waiting to save until your child is older could mean you have to shell out a larger sum in a short time, which can strain family finances. Starting early with NPS Vatsalya helps you spread out the investment, reduces pressure, and gives the money enough runway to grow, helping you keep pace with inflation. Even investing as little as ₹500 a month consistently can accumulate a substantial corpus over 15-18 years. How NPS Vatsalya Works: The Simple Steps 1. Opening the Account A parent or legal guardian can open the account for a child aged between 1 month to 18 years. The process is straightforward, available online or at authorised points, and requires basic KYC documents. 2. Invest Regularly You can contribute a minimum of ₹1000 per contribution with no upper limit, with no upper limit, whenever convenient — monthly, quarterly, or yearly. 3. Investment Choices The funds are invested in a mix of government bonds, equities, and corporate debt, managed by professional fund managers under a low-risk, moderate-risk, or active risk profile chosen by the parent. 3. Tax Benefits Contributions to the NPS up to ₹1.5 lakh in a financial year qualify for deductions under Section 80C of the Income Tax Act. Additionally, contributions up to ₹50,000 per year are deductible under Section 80CCD(1B), separate from the ₹1.5 lakh limit under Section 80C, but this benefit is available only under the old tax regime. This allows you to save for your child while reducing your taxable income. 4. Maturity and Withdrawal Upon reaching 18 years, your child's account transitions to a standard National Pension System (NPS) account. At maturity (typically age 60), standard NPS withdrawal rules apply: up to 60% of the corpus can be withdrawn lump-sum tax-free, while at least 40% must be used to purchase an annuity for lifelong financial support. How to Open an NPS Vatsalya Account: A Step-by-Step Guide 1. Go Online Visit Protean eGov Technologies Website Click on 'NPS Vatsalya' and fill in your child's and your details. Use Aadhaar for quick verification, or upload documents if you prefer. Pay at least ₹1,000 to start. You can use net banking, debit card, or UPI—super easy! Add money whenever you can. You can even set up auto-debit so you never miss a payment. Check your account online anytime. When your child turns 18, they take over, and the account keeps growing for their retirement. Start Early, Start Small: Even small monthly contributions matter more than a big lump sum later. Even small monthly contributions matter more than a big lump sum later. Review Annually: Check your investment returns yearly and adjust the risk profile if necessary. Check your investment returns yearly and adjust the risk profile if necessary. Encourage Your Child: When your child turns 18, educate them on financial planning and how to manage their NPS account responsibly. When your child turns 18, educate them on financial planning and how to manage their NPS account responsibly. Combine with Other Savings: NPS Vatsalya is a part of a broader financial plan — complement it with fixed deposits, mutual funds, or insurance. 2. Complete KYC 3. Make Your First Contribution 4. Keep Contributing 5. Watch Your Child's Future Grow Quick Tips to Maximise Your NPS Vatsalya Investment Conclusion Securing your child's future is more than just a dream — it's a responsibility that begins today. NPS Vatsalya offers a practical, affordable, and tax-friendly way to build a financial cushion that grows with your child. With rising education costs and uncertain economic times, having a dedicated long-term savings plan is no longer optional — it's essential. Take the first step now. Open an NPS Vatsalya account, start small, stay consistent, and watch your child's dreams take flight — one smart investment at a time. FAQs 1. Is it good to invest in the NPS Vatsalya scheme? NPS Vatsalya is a great option for parents to save for their child's future with market-linked returns and compounding benefits. It encourages early financial planning but involves some market risk. 2. Can I open NPS for my child? Yes, parents or guardians can open an NPS Vatsalya account for their child under 18, who must be an Indian citizen. The account is managed by the guardian until the child turns 18. 3. Can NPS Vatsalya be withdrawn? Yes, up to 25% of contributions can be withdrawn after 3 years for specific needs like education or medical emergencies, with a maximum of three withdrawals before age 18. At 18, the child's NPS account becomes a standard NPS account. At exit (usually 60), up to 60% of the corpus can be withdrawn tax-free, at least 40% must buy an annuity, unless the corpus is below ₹2.5 lakh, which can be fully withdrawn. 4. Is NPS Vatsalya tax free? Contributions to NPS Vatsalya may offer tax deductions up to ₹50,000 under Section 80CCD(1B) from FY 2025-26, but annuity income is taxable. Confirm with a tax advisor for clarity. 5. How to open Vatsalya NPS? Visit the eNPS website or a Point of Presence (like banks or post offices), provide guardian and child details, submit KYC documents, and make a minimum ₹1,000 initial contribution to get a PRAN.
News18
12-06-2025
- Business
- News18
Senior Citizens Savings Scheme: Eligibility, Feature, Interest Rates And Taxability
Last Updated: The investment itself is tax-deductible under Section 80C, but the interest earned is completely taxable. The Senior Citizen Savings Scheme (SCSS) is government-backed in India, introduced in 2004 to provide financial security to senior citizens who require a consistent income following retirement. It offers a fixed interest rate of 8.2 per cent (as of June 12, 2025), payable quarterly to all individuals aged 60 and above. They can invest up to Rs 30 lakhs during a 5-year period that can be extended for an additional three years. The investment itself is tax-deductible under Section 80C, but the interest earned is completely taxable. Let's take a closer look at its Eligibility Criteria, Features, Interest Rate, Taxability and more. Eligibility: The individual should have to be above 60 years of age to open a SCSS account in a Post office or a bank. Retired civilians aged 55 and up, but under 60. However, the investment should be made within one month of receiving the retirement benefits. Retired defence employees above 50 years and below 60 years. The investment criteria remain the same as the retired civilians. Accounts can be opened as individuals or jointly with a spouse. The total amount deposited in the joint account will be attributed only to the first account holder. Notably, Non-Resident Indians (NRI) or Hindu Undivided Families (HUF) are not eligible to open an account. The individual must submit their PAN Card and Aadhaar Card numbers. All the eligible individuals can invest in SCSS with a minimum of Rs 1,000 and a maximum of Rs 30 lakh. The SCSS interest rate is fixed at 8.2 per cent annually. The rate is updated quarterly and the final rate is determined by factors such as inflation, market conditions and others. The savings scheme lasts five years. You can choose to extend the term for another three years. You must submit a request to the bank within one year of maturity. You can only select to extend the tenure once. After one year of account opening, you may withdraw funds prematurely from your SCSS account. If you open a SCSS scheme, you will be able to receive quarterly disbursals. Banks make interest payments on April 1, July 1, October 1 and January 1. Taxability: It provides both tax benefits and is liable to taxation. Investments in SCSS are eligible for deductions under Section 80C of the Income Tax Act, up to Rs 1.5 lakhs per year. The interest is taxable based on an individual's tax slab and TDS (Tax Deducted at Source) applies if the interest exceeds Rs 50,000 per year. Also, senior citizens can claim a maximum of Rs 50,000 annual deduction on interest earned under Section 80TTB of the Income Tax Act. Note: An SCSS account can be transferred from a post office to a bank and vice versa. Furthermore, it is transferable throughout India. First Published: June 12, 2025, 15:12 IST
