As a salaried professional in India, taxes can take a significant chunk out of your income — but they don’t have to. With smart planning and a good understanding of the Indian tax system, you can reduce your taxable income legally and efficiently. The key is to make full use of the deductions and exemptions available under the Income Tax Act of India.

In this guide, we break down the top tax-saving strategies every salaried individual should consider for the current financial year.

1. Maximize Deductions Under Section 80C (Up to ₹1.5 Lakh)

Section 80C is the most widely used deduction by salaried employees. You can claim up to ₹1,50,000 in a financial year for investments and expenses like:

• Employee Provident Fund (EPF)

• Public Provident Fund (PPF)

• Life Insurance Premiums

• Tax-saving Fixed Deposits (5-year)

• Equity-Linked Saving Schemes (ELSS)

• Principal repayment on a home loan

• Tuition fees for children (up to 2 kids)

 Pro Tip: ELSS offers the shortest lock-in (3 years) among 80C instruments and has potential for high returns.

2. Additional ₹50,000 Deduction Under Section 80CCD(1B) – NPS Contributions

If you’ve already exhausted the ₹1.5 lakh limit under 80C, you can claim an additional ₹50,000 for investing in the National Pension Scheme (NPS) under Section 80CCD(1B).

This deduction is over and above the 80C limit and is ideal for long-term retirement planning.

3. House Rent Allowance (HRA) – Reduce Tax if You Pay Rent

If you live in a rented house and receive HRA as part of your salary, you can claim an HRA exemption. The amount exempt depends on:

• Actual HRA received

• Rent paid minus 10% of salary

• 50% of salary in metro cities / 40% in non-metros

 Submit rent receipts and landlord PAN if rent exceeds ₹1 lakh/year.

4. Section 80D – Health Insurance Premiums

Health insurance not only secures you medically but also saves taxes.

• Claim up to ₹25,000 for premiums paid for self, spouse, and children.

• An additional ₹25,000 (₹50,000 for senior citizens) is available for parents.

• Preventive health check-ups can fetch up to ₹5,000 (within the above limits).

5. Section 24(b) – Home Loan Interest Deduction

If you have taken a home loan, you can claim up to ₹2,00,000 per year on interest paid under Section 24(b), provided the property is self-occupied or vacant.

If the property is let out (rented), the entire interest amount is deductible, but the total loss that can be adjusted under the head “Income from house property” is capped at ₹2 lakh per year.

6. Standard Deduction – ₹50,000 Automatically Deducted

All salaried employees are entitled to a flat ₹50,000 standard deduction without needing to submit any proof or documentation. This was introduced to simplify tax calculation and reduce the need for multiple exemptions.

7. Tax Benefits on Education Loans (Section 80E)

If you’re repaying an education loan, you can claim the entire interest amount (no limit) for up to 8 years under Section 80E. This deduction is available for higher education loans taken for yourself, spouse, children, or legal dependents.

8. Leave Travel Allowance (LTA)

You can claim tax exemption on domestic travel expenses incurred during leave, provided it’s part of your salary structure.

• Covers travel within India only

• Only actual travel fare is exempt (not food or hotel)

• Two claims in a block of 4 calendar years (next block: 2022–2025)

9. Opt Between the Old and New Tax Regime

Under the new tax regime, tax rates are lower but most exemptions and deductions (like 80C, HRA) are not available.

You can choose between old and new regimes each year depending on your financial profile.

 Tip: Use a tax calculator to compare both regimes and choose the one with the lowest tax liability.

10. Submit Proofs on Time & Plan Early

Many salaried employees scramble during March to submit investment proofs. This can lead to rushed decisions and missed opportunities.

• Plan your investments at the start of the financial year

• Submit declarations and proofs to your employer on time

• Maintain digital records of all tax-related documents

Final Thoughts

Smart tax planning is not about avoiding taxes — it’s about making informed decisions that align with your financial goals while staying compliant. Whether you’re just starting your career or climbing the corporate ladder, a structured approach to your investments and deductions can save you thousands every year.