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Last-minute tax saving tips for the FY 2021-22

Written by - Akshatha Sajumon

March 16, 2022 8 minutes


Tax planning or tax saving is a ritual that every taxpayer should undertake from the beginning of a financial year. It requires analyzing the finances and investing in such securities that can not only help in saving taxes but can also help in long-term wealth-building for the taxpayers. However, there is also a section of taxpayers that keep on procrastinating their tax planning or may not be aware that they are liable to pay tax and need a few last-minute tax savings options that can help them reduce their tax burden. 

Given below are a few quick tax-saving options that can be opted by the taxpayers for such last-minute tax planning or tax savings. 

What are the points to be considered before making any last-minute tax savings?

There are a few points that have to be considered by taxpayers before making last-minute investments. Some of such points are considered below.

  1. The minimum amount that needs to be invested for maximum tax savings
  2. The cost of investment of different investment options
  3. The objective or the goal of the investment
  4. The lock-in period of the investment 
  5. The post-tax returns of various tax savings instruments

These points are important to make effective investment decisions that can yield long-term purpose-driven investments and returns for the taxpayers.

What are the top last-minute tax investment options?

After discussing the basic considerations while making last-minute tax planning, let us now discuss a few key last-minute tax investment options. 

  1. Contribution to PPF and VPF

One of the primary tax savings options that can be used by taxpayers is the contribution to PPF and VPF. Taxpayers can contribute to PPF and gain interest at the rate of 8.1% per annum (Rate of interest for FY 2021-22), however, the lock-in period of this investment is 15 years. At the same time, employees can also contribute towards VPF (Voluntary Provident Fund) which is a contribution by employees in excess of the mandatory contribution under EPF. Under contribution to VPF, employees can contribute up to 100% of their basic salary and dearness allowance. It is important to note that from FY 21-22, contributions over Rs. 2,50,000 towards VPF will attract tax liability for the employees on the interest earned over such excess contribution. 

  1. Contribution to NPS

NPS is a government-backed scheme that aims to provide an investment in the form of a retirement solution. This scheme allows the investors to get a tax deduction under section 80C up to Rs. 1,50,000. Furthermore, taxpayers can also get an additional discount of Rs. 50,000 under section 80CCD(1B). The scheme provides a tax exemption for 40% of the maturity proceeds while the remaining 60% can also be used in tax savings if they are invested in annuity plans. The process of opening an NPS account is also quite streamlined as well as available online now which helps the taxpayers ensure that they can invest in NPS even as a last-minute tax-saving instrument. 

  1. Contribution towards health insurance premium under section 80D

Section 80D of the Income Tax Act provides deduction towards health insurance premiums up to Rs. 25,000 for taxpayers below the age of 60 and Rs. 50,000 for taxpayers above the age of 60 years. This section also provides for a deduction of Rs. 5,000 for preventive health check-up which is included in the overall lit of 25,000 or 50,000 specified under section 80D as the case may be. Health insurance is one of the prime requirements that is crucial for every person and their family. The process to buy health insurance is quite easy and can be done online by simply approaching a competent health insurance provider. 

  1. Contribution towards medical treatment of specified diseases and ailments

Apart from providing a deduction for health insurance premiums, the Income Tax Act, also provides a deduction for expenses towards the medical treatment of specified diseases and ailments under section 80DDB. The specified diseases and ailments for this purpose (like AIDS, cancer, thalassemia, etc.) are mentioned by the Department on their website. The deduction under this section is up to Rs. 40,000 for taxpayers till the age of 60 years and Rs. 1,00,000 for seniors and super senior citizens. 

  1. Deduction for interest paid on education loans

The interest expenses on the payment of education loans for self, spouse, or children can also be claimed as a deduction under the income tax laws in India under section 80E. This helps in reducing the overall cost of education as well as reducing the ultimate tax liability of the taxpayers. 

  1. Deduction for payment of home loan principal and interest

Home loan repayment is often one of the major expenses for any person. The Income Tax Act, therefore, aims to provide relief in the payment of this expenditure in the form of a deduction for the principal as well as interest payment. Taxpayers get a deduction of up to Rs. 1,50,000 under section 80C for the principal component of the home loan EMI as well as the deduction of up to Rs. 2,00,000 towards the interest component of the EMI under section 24 of the Act. This deduction not only allows the taxpayers to reduce their tax liability as well as allows them better financial planning of their expenses.

  1. Deduction for investment in tax savings FDs

While the above deductions are towards the various expenses of the taxpayers, section 80C also includes a deduction for a contribution towards certain investments. One such investment is a contribution towards tax savings bank FDs. These FDs have a minimum lock-in period of 5 years and the rate of interest varies depending on the bank. Banks also provide additional interest rates for senior citizens which can vary depending on the bank guidelines. 

  1. Deduction for investment in tax saving mutual funds

ELSS funds are another important tax savings instrument. Mutual funds have become a staple of every investor today on account of better returns at manageable risks. Certain mutual funds like ELSS funds (Equity Linked Savings Scheme) also allow the investors to claim a deduction of up to Rs. 1,50,000 under section 80C for their investment. The lock-in period of ELSS funds is 3 years but the gains from these funds are taxable in the hands of investors.

  1. Investment in any government savings scheme

The government of India has time and again provided many tax savings schemes that aim at public welfare and wealth building for the citizens as well as act as a tax savings instrument. Some of such government savings schemes that can be used as last-minute tax savings instruments are NSC (National Savings Certificate), Senior Citizen Savings Scheme (SCSS), Sukanya Samridhi Scheme, Post Office Time Deposit Schemes, Government Securities or Bonds, etc. Taxpayers can deduction of up to Rs. 1,50,000 under section 80C of the Income Tax Act, 1961


Tax planning and tax savings instruments mentioned above can be used by taxpayers as last-minute tax savings instruments as they can help in reducing their tax liability. However, it is crucial to begin tax planning from the very start of the financial year to avoid any last-minute hassles and to ensure that taxpayers can compare the tax savings investment options with more caution and better parameters.


1. What are some other last-minute tax savings tips for FY 21-22?

Some last-minute tax savings tips include, 
a) Contribution to any charity or registered charitable organizations for claiming deduction under section 80G up to 50% or 100% of the contribution depending on the nature of the organization or trust.
b) Contribution to any political party to gain deduction up to 100% under section 80GGB and section 80GGC as the case may be.
c) Amount paid towards house rent under section 80GG.
d) Deduction of the amount paid for medical attention and treatment of a person with a disability under section 80U.

2. Are the tuition fees paid for the education of children deductible as per tax laws?

Yes, the tuition fees paid for the education of the children can be claimed as a deduction under section 80C up to Rs. 1,50,000.

3. Can the payment of life insurance premium be claimed as a deduction?

Yes. Life insurance premium payment can be claimed as a deduction under section 80C for up to Rs. 1,50,000.

4. What is the maximum deduction that can be claimed under section 24 of the Income Tax Act?

Section 24 of the Income Tax Act, allows the taxpayers to claim a deduction for payment of interest on a home loan up to Rs. 2,00,000 in any financial year.

5. What is the minimum lock-in period for ELSS funds?

The minimum lock-in period of ELSS funds is 3 years.

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