Introduction
For most salaried professionals in India, the annual tax season often feels like a tug-of-war between hard-earned income and mandatory deductions. While taxes are inevitable, overpaying them isn’t. The Income Tax Act of India provides several smart avenues for saving taxes legally, yet many individuals fail to fully explore them. By carefully planning your investments and deductions, you can reduce your tax liability and retain more money in your pocket—without compromising financial growth.
Key Tax-Saving Avenues for Salaried Individuals
1. Section 80C Investments (₹1.5 Lakh Limit)
- Public Provident Fund (PPF)
- Employee Provident Fund (EPF)
- Equity Linked Savings Scheme (ELSS – Tax Saving Mutual Funds)
- National Savings Certificate (NSC)
- Life Insurance Premiums
- 5-Year Fixed Deposits in banks/post office
👉 Maximum deduction allowed: ₹1.5 lakh per year
t 2. House Rent Allowance (HRA) Exemption
- If you live in a rented house and receive HRA, you can claim exemption under Section 10(13A).
- The deduction depends on your actual rent, basic salary, and city of residence.
👉 Helps reduce taxable income for salaried employees staying in rented homes.
3. Home Loan Benefits
- Principal Repayment (Section 80C): Up to ₹1.5 lakh
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4. Medical Insurance Premiums (Section 80D)
- Deduction for health insurance premium paid for self, spouse, children, and parents.
- ₹25,000 for individuals below 60 years.
- ₹50,000 for senior citizens.
👉 Also covers preventive health check-ups up to ₹5,000 (within the above limits).
5. National Pension System (NPS) – Section 80CCD(1B)
- Additional deduction of ₹50,000 over and above Section 80C limit.
- Encourages retirement savings with tax benefits.6. Standard Deduction
- A flat deduction of ₹50,000 is available to all salaried employees.
- Automatically reduces taxable income without requiring investment proof.
- 7. Leave Travel Allowance (LTA)
- Tax exemption available on travel expenses (not hotels/food) for trips within India.
- Can be claimed twice in a block of 4 years.
- 8. Other Lesser-Known Options
- Education Loan Interest (Section 80E): Full interest deduction (no cap, up to 8 years).
- Donations (Section 80G): Deduction on donations made to approved charities/relief funds.
- Savings Account Interest (Section 80TTA): Up to ₹10,000 deduction.
