How to Save Tax on Salary in India – Smart Strategies for FY 2024–25
How to Save Tax on Salary in India – Smart Strategies for FY 2024–25
As the new financial year FY 2024–25 begins, salaried individuals in India are once again looking for ways to reduce their income tax burden legally. The good news is, there are several smart and completely legitimate strategies you can use to lower your taxable income, boost savings, and make the most of government benefits. Whether you earn ₹3 lakh or ₹15 lakh a year, there’s always a way to save more!
This guide provides a detailed breakdown of how to save tax on salary income in India using exemptions, deductions, and other smart tax-saving techniques.
---📌 Understand the Two Tax Regimes
As of FY 2024–25, India offers two income tax regimes:
- Old Tax Regime – Allows various deductions and exemptions (HRA, 80C, 80D, etc.)
- New Tax Regime – Lower tax slabs but fewer deductions and exemptions
Choose the regime that results in a lower tax outflow based on your income, deductions, and investments.
Example: If you claim home loan interest, 80C, and HRA, the old regime may work better. If you don’t have many deductions, the new regime might suit you more.
---💡 1. Make Full Use of Section 80C (Up to ₹1.5 Lakh)
Section 80C is the most popular tax-saving provision. You can claim up to ₹1.5 lakh in deductions every financial year through:
- 👨👩👧👦 Employee Provident Fund (EPF)
- 📚 Tuition fees for children
- 🏠 Home loan principal repayment
- 💰 Public Provident Fund (PPF)
- 📈 ELSS Mutual Funds (Equity Linked Saving Scheme)
- 💎 National Savings Certificate (NSC)
- 🔐 5-Year Tax Saving Fixed Deposits
- 🏫 Sukanya Samriddhi Yojana (for girl child)
Pro Tip: ELSS has the shortest lock-in period (3 years) and potential for better returns over time.
---🏥 2. Claim Deductions Under Section 80D (Health Insurance)
You can claim deductions for premiums paid for health insurance:
- 🧍♂️ Self & family (under 60 years): ₹25,000
- 👴 Senior citizen parents: ₹50,000
Total deduction possible: ₹75,000 (if you’re under 60 and parents are senior citizens)
Example: Rahul pays ₹20,000 for his family’s health insurance and ₹40,000 for his parents. He can claim ₹60,000 in deductions under 80D.
---🏠 3. Use House Rent Allowance (HRA) Wisely
If you live in a rented home and receive HRA as part of your salary, you can claim HRA exemption under Section 10(13A).
Amount of HRA exemption is the least of the following:
- Actual HRA received
- 50% of salary if living in metro cities (40% otherwise)
- Rent paid – 10% of basic salary
Pro Tip: Always keep rent receipts or a rent agreement to claim HRA. You can even pay rent to your parents (with proper documentation).
---🏠 4. Claim Home Loan Interest (Section 24b)
Under Section 24(b), you can claim up to ₹2 lakh per year on home loan interest if the house is self-occupied.
For a rented property, there’s no upper limit (but loss from house property is capped at ₹2 lakh).
Combine this with 80C (for principal repayment) to save big on taxes.
---🎓 5. Education Loan Interest (Section 80E)
Paying off an education loan? You can claim the entire interest amount as a deduction under 80E for up to 8 years.
There is no cap on the amount you can claim, but it applies only to the interest component, not principal repayment.
---🚗 6. Claim Leave Travel Allowance (LTA)
LTA can be claimed for domestic travel within India (airfare, train, or bus) for yourself and family. It can be claimed twice in a block of four years.
Pro Tip: Maintain travel bills, boarding passes, and apply through your employer to get the benefit.
---👩⚕️ 7. Preventive Health Checkup (Part of 80D)
You can claim up to ₹5,000 for preventive health check-ups for yourself and family as part of the ₹25,000 or ₹50,000 80D limits.
Use this benefit annually for a routine health checkup and tax savings!
---🏦 8. Use the National Pension Scheme (NPS) – Extra ₹50,000
Investing in NPS allows you to claim:
- 💰 Up to ₹1.5 lakh under 80C
- 📈 Additional ₹50,000 under Section 80CCD(1B)
That’s a total of ₹2 lakh tax deduction just from NPS! Plus, it helps you build a retirement corpus.
---📚 9. Standard Deduction of ₹50,000
All salaried employees are automatically eligible for a standard deduction of ₹50,000 from their gross salary under both tax regimes (subject to limits in new regime).
No documents or bills are needed—it's applied by default.
---🎁 10. Other Smart Tips to Save Tax
- 💼 Reimbursements like mobile, internet, and fuel can be tax-free if structured via salary
- 🧾 Donate to registered charities under 80G and claim deductions (up to 100%)
- 🏥 Deduction of ₹75,000–₹1,25,000 under 80U for disabled individuals
- 💊 Deduction under 80DD and 80DDB for medical treatment of dependents with disability or critical illness
🧾 Sample Tax Saving Plan for ₹10 Lakh Salary
| Tax Saving Option | Amount (₹) |
|---|---|
| 80C (PPF, ELSS, EPF, etc.) | 1,50,000 |
| 80D (Health Insurance) | 25,000 |
| NPS (80CCD 1B) | 50,000 |
| HRA | 1,20,000 |
| Standard Deduction | 50,000 |
| Home Loan Interest | 2,00,000 |
| Total Tax Saving | ₹5,95,000 |
📌 Final Thoughts
With smart planning and timely investments, you can save a significant amount of tax legally while meeting your financial goals. Don’t wait until March to rush into tax-saving mode—start early, plan ahead, and choose the best combination of deductions and investments that suit your profile.
Always consult a tax advisor if you're unsure about the right strategy, especially when choosing between the old and new tax regimes. Remember, the best way to save tax is to align your financial goals with tax-saving instruments.
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