Every rupee saved in tax is a rupee earned. As a salaried employee in India, you have access to numerous legal tax-saving options. Here are the top 10 strategies our CA team recommends for the financial year 2024-25.
1 Section 80C Investments Save up to ₹46,800
Section 80C allows a deduction of up to ₹1.5 lakh per year on eligible investments and expenses. This alone can save you up to ₹46,800 in tax (at 30% slab + 4% cess).
Popular 80C options include:
- Employee Provident Fund (EPF) — automatic for most salaried employees
- Public Provident Fund (PPF) — 15-year lock-in, tax-free returns
- ELSS Mutual Funds — lowest lock-in (3 years), market-linked returns
- 5-Year Tax Saving Fixed Deposits
- Life Insurance Premium
- National Savings Certificate (NSC)
- Tuition fees for up to 2 children
- Home loan principal repayment
💡 Pro Tip: Don't invest in 80C just for tax saving. Choose products based on your financial goals — PPF for safety, ELSS for growth.
2 Section 80D — Health Insurance Save up to ₹25,000+
Premiums paid for health insurance are deductible under Section 80D:
- ₹25,000 for self, spouse, and children
- ₹25,000 additional for parents (₹50,000 if parents are senior citizens)
- Total maximum deduction: ₹1,00,000 in certain cases
Preventive health check-ups up to ₹5,000 are also included within these limits.
3 House Rent Allowance (HRA) Exemption
If you receive HRA as part of your salary and pay rent, you can claim HRA exemption. The exemption is the minimum of:
- Actual HRA received from employer
- Rent paid minus 10% of basic salary
- 50% of basic salary (metro cities) or 40% (non-metro)
⚠️ Important: If your annual rent exceeds ₹1 lakh, you must provide the landlord's PAN to claim HRA exemption.
4 NPS — Section 80CCD(1B) Extra ₹50,000 deduction
The National Pension System (NPS) offers an additional deduction of ₹50,000 under Section 80CCD(1B) — over and above the ₹1.5 lakh 80C limit. This means you can save tax on a total of ₹2 lakh by combining 80C + NPS.
5 Home Loan Interest — Section 24(b) Up to ₹2 Lakh
If you have a home loan for a self-occupied property, you can claim up to ₹2 lakh deduction on interest paid per year under Section 24(b). For let-out property, there is no upper limit on interest deduction.
6 Leave Travel Allowance (LTA)
LTA covers travel expenses for you and your family within India. You can claim LTA exemption twice in a block of 4 years. The current block is 2022-2025. Eligible travel modes: air (economy class), train (AC 1st class), or public transport.
7 Standard Deduction ₹50,000 Flat
Every salaried employee automatically gets a flat ₹50,000 standard deduction from their gross salary — no investment or proof required. This is available in both old and new tax regimes.
8 Education Loan Interest — Section 80E
Interest paid on education loans for higher studies (self, spouse, or children) is fully deductible under Section 80E with no maximum limit. The deduction is available for 8 years from the year of repayment.
9 Donations — Section 80G 50%–100% Deduction
Donations to approved charitable organizations qualify for deductions under Section 80G. Some donations get 100% deduction (PM Relief Fund, etc.) while others get 50%. Cash donations above ₹2,000 are not eligible.
10 Choose Right Tax Regime — Old vs New
From FY 2023-24, the New Tax Regime is the default. You must actively opt for the Old Regime to claim deductions like 80C, HRA, etc.
- New Regime: Lower tax rates, but no major deductions (except standard deduction)
- Old Regime: Higher rates, but all deductions available
💡 Our Advice: If your total deductions exceed ₹3.75 lakh, the Old Regime is usually better. A CA can calculate the exact break-even for your specific situation.
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