Salaried individuals can optimize tax savings through deductions, exemptions, and smart investments under the old tax regime while evaluating the new tax regime’s benefits. Below are the best tax-saving strategies:
Section 80C allows deductions up to ₹1.5 lakh per year, helping reduce taxable income.
Investment/Expense
Tax Benefits
Employees’ Provident Fund (EPF)
Mandatory for salaried individuals, earns tax-free interest.
Public Provident Fund (PPF)
Long-term tax-free investment with a 15-year lock-in.
Equity-Linked Savings Scheme (ELSS)
Market-linked investment, 3-year lock-in, potential for high returns.
National Pension System (NPS) – Tier I
₹50,000 extra deduction under 80CCD(1B) beyond ₹1.5 lakh limit.
Life Insurance Premium
Premiums for self, spouse, and children qualify for deduction.
Tax-Saving Fixed Deposit (5-year FD)
Offers safety but taxable interest.
Sukanya Samriddhi Yojana (SSY)
For daughters under 10 years, tax-free maturity.
Home Loan Principal Repayment
Deduct principal amount repaid under 80C.
📌 2. Additional Tax Benefits Beyond 80C
🏡 Section 24(b) – Home Loan Interest (₹2 lakh deduction)
Deduct up to ₹2 lakh per year on home loan interest under a self-occupied property.
No limit if the property is rented out.
🏥 Section 80D – Health Insurance (₹25,000 to ₹1 lakh deduction)
Category
Max Deduction
Self, spouse, children (<60 years)
₹25,000
Parents (Senior Citizens)
₹50,000
Preventive Health Check-ups
₹5,000 (within limits)
🏢 Section 80E – Education Loan (Unlimited deduction on interest)
Interest on loans for higher education (self, spouse, children) is fully deductible.
🏦 Section 80CCD(1B) – NPS Extra Deduction (₹50,000 extra)
Additional ₹50,000 deduction for National Pension System (NPS) Tier I.
🏠 Section 80EE & 80EEA – First-Time Home Buyers (₹50,000 to ₹1.5 lakh extra)
Additional deduction for first-time homebuyers under certain conditions.
📌 3. Optimize Allowances & Exemptions
Allowance/Exemption
Max Tax-Free Limit
Standard Deduction
₹50,000 (for salaried individuals)
HRA (House Rent Allowance) – Section 10(13A)
Varies (depends on rent, salary, and city)
Leave Travel Allowance (LTA)
Twice in 4 years for domestic travel expenses
Food Coupons (Sodexo, Zeta, etc.)
₹50 per meal (₹2,400/month)
Mobile/Internet Reimbursement
Based on actual usage
📌 4. Tax-Free Investment Strategies
Investment Option
Returns (p.a.)
Taxation
EPF (Employee Provident Fund)
8%
Tax-free after 5 years
PPF (Public Provident Fund)
7.1%
Fully tax-free
ELSS (Tax Saving Mutual Funds)
10-15%
LTCG tax after ₹1 lakh
NPS (National Pension System)
8-12%
Partially taxable on withdrawal
Sukanya Samriddhi Yojana
8%
Fully tax-free
📌 5. Choosing Between New & Old Tax Regime
Income (₹)
Old Regime (With Deductions)
New Regime (Without Deductions)
Up to ₹7 lakh
Tax-Free (with rebates)
Tax-Free (₹7 lakh rebate)
₹7-10 lakh
Prefer Old (80C, 80D benefits)
New (Lower Slabs)
₹10-15 lakh
Old (with home loan, investments)
New (if no deductions)
Above ₹15 lakh
Depends on exemptions & deductions
New (if no major deductions)
✔️ Old Regime – Best for those with high 80C, HRA, 80D, home loan deductions. ✔️ New Regime – Simpler, better if you don’t claim deductions.
📌 Smart Tax Planning Tips
✅ Invest early in tax-saving instruments to avoid last-minute decisions. ✅ Utilize employer benefits (EPF, NPS, HRA). ✅ Check capital gains tax on stocks/mutual funds before selling investments. ✅ Opt for tax-efficient investments like ELSS & PPF for long-term growth. ✅ Use the New Tax Regime if deductions are minimal.
