Tax season can feel overwhelming for many salaried professionals in India. With a chunk of your hard-earned income going towards taxes, it’s only natural to look for ways to reduce your liability—legally and smartly. The good news? The Indian Income Tax Act offers several provisions that help you save money. You just need to know where to look.
Let’s break down some of the most effective and practical ways to save on taxes without complicating your life.
1. Make the Most of Section 80C
This is one of the most popular tax-saving tools for salaried employees. Under Section 80C, you can claim deductions up to ₹1.5 lakh per financial year. Some common investments and expenses that fall under this section include:
- Employee Provident Fund (EPF)
- Public Provident Fund (PPF)
- Life Insurance Premiums
- ELSS (Equity Linked Saving Scheme) mutual funds
- Principal repayment of home loan
- Tuition fees for children
- National Savings Certificate (NSC)
If you’re not utilizing the full ₹1.5 lakh limit, you’re leaving money on the table.
Additional ₹50,000 Deduction with NPS (Section 80CCD(1B))
Beyond Section 80C, the government encourages retirement savings through the National Pension System (NPS). Investing in NPS not only helps you plan for retirement but also gives you an extra ₹50,000 deduction. That’s a total of ₹2 lakhs of tax savings when combined with Section 80C.
Claim HRA (House Rent Allowance)
If you’re living in a rented house and getting HRA as part of your salary, you can claim a tax exemption on it. The amount you can claim depends on your salary, the HRA you receive, the rent you pay, and the city you live in. Even if your landlord is a family member (say, your parents), you can pay rent to them and claim HRA—just make sure it’s genuine and documented.
Standard Deduction & Other Salary Components
All salaried employees get a flat standard deduction of ₹50,000 from their income—no bills or paperwork needed. Additionally, structure your salary to include tax-free components such as:
- Food coupons or meal cards
- Leave Travel Allowance (LTA)
- Reimbursements for telephone bills, internet, or transport
Talk to your HR or payroll department to make the most of these allowances.
Tax Benefits on Home Loan (Section 24 & 80EEA)
Buying a home? You can claim up to ₹2 lakh as a deduction on the interest paid on a home loan under Section 24. First-time homebuyers can claim an additional ₹1.5 lakh under Section 80EEA (subject to conditions). This is a huge benefit if you’re planning for long-term stability.
Health Insurance (Section 80D)
Premiums paid for health insurance (for yourself, your spouse, children, and parents) are eligible for deductions up to ₹25,000 – and ₹50,000 if you’re covering senior citizen parents. It’s a smart way to save money while ensuring medical security for your family.
Final Thoughts
Tax saving isn’t just about cutting your liabilities—it’s also about planning your finances better. Don’t wait until March to scramble for deductions. With a little planning and smart investments spread throughout the year, you can reduce your tax burden significantly and even grow your wealth in the long run.
The key is to stay informed and make choices that align with your financial goals. After all, every rupee saved is a rupee earned!