Income Tax Saving Tips for Salaried

income tax saving tips for salaried

There are multiple investment options that salaried person can use to save income tax with old tax regime. These include standard deduction, investments under Section 80C, Section 80D, Section 24, HRA, etc. which can help you lower your income tax on salary. Please note that new tax regime does not allow majority of the investment options to be used to save income tax.

Let us understand various Income Tax Saving Tips for Salaried person.

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Standard Deduction

Standard Deduction is the flat deduction that can be claimed with old tax regime and new tax regime. With old tax regime, Rs. 50,000 standard deduction is allowed and with new tax regime Rs. 75,000 standard deduction is allowed for salaried people.

This deduction is a flat deduction which will be automatically applied while calculating income tax on salary. Hence standard deduction helps you to save income tax.

Section 80C

Section 80C includes many investment options mentioned below:

Section 80C provides you with maximum deduction of Rs. 1.5 lakh in a financial year. This is separate deduction apart from standard deduction. Note that you can claim section 80C deduction only with old tax regime.

New tax regime does not allow these deductions to be claimed.

ALSO READ: All Deductions under various Sections

Section 80D

Section 80D includes the premiums paid for medical insurance of self and family members. You can claim Rs. 25,000 under Section 80D for self, spouse and children and separate Rs. 25,000 can be claimed for parents medical insurance as well.

If parents are senior citizens than Rs. 50,000 can be claimed for them as medical insurance premiums under Section 80D.

Below is the table explaining the maximum deductions that can be claimed under Section 80D:

LabelsMaximum Amount Claim (Section 80D)
Non Senior Self, Spouse, childrenRs. 25,000
Non Senior ParentsRs. 25,000
Senior Self and familyRs. 50,000
Senior citizen parentsRs. 50,000
Section 80D deduction limits

Section 80CCD(1B)

Section 80CCD(1B) includes NPS or National Pension System which allows Rs. 50,000 to be claimed with old tax regime. This is apart from the Rs. 1.5 lakh Section 80C deduction.

You can invest in NPS online and save income tax with old tax regime. NPS allows you to save for future after retirement with help of monthly pension.

Section 24

Section 24 allows you to save income tax with home loan you have taken to buy a new house. The interest portion in home loan can be claimed under Section 24.

When you pay home loan EMI, there are 2 components – principal amount and interest amount.

Principal amount can be claimed under Section 80C and interest amount in financial year can be claimed under Section 24 that has maximum limit of Rs. 2 lakh.

HRA (House Rent Allowance)

HRA or house rent allowance is the component of your salary slip that can be claimed to save income tax with old tax regime. HRA exemption calculation depends on certain calculations or formula based on which you can claim the deduction amount.

Basic Salary, HRA component and your house rent is used to calculate the HRA exemption amount.

Note that HRA can be claimed only with old tax regime. New tax regime does not allow HRA deduction.

Conclusion

So these are some of the investment options that can be used to claim deductions and save income tax. Below is the summary of these options with their maximum limits to be claimed under old tax regime:

LabelsDeduction Limits
Standard DeductionRs. 50,000 & Rs. 75,000
Section 80CRs. 1.5 Lakh
Section 80DRs. 50,000
Section 80CCD(1B)Rs. 50,000
Section 24Rs. 2 Lakh
HRANo Limit
Income Tax Saving tips for salaried

Frequently Asked Questions

How can a salaried person save income tax?

Salaried person can save income tax using various options including standard deduction, section 80C, section 80D, section 90CCD(1B) , section 24, HRA (House rent allowance). These options can help to save tax with old tax regime.

How can I reduce my income tax from salary?

You can easily reduce the income tax from salary using various investment schemes are deductions mentioned above with old tax regime, New tax regime allows minimum deductions to be claimed.

How can I save 30% tax on my salary?

30% tax on salary can be saved by investing in options such as PPF (Public Provident Fund), life insurance premiums, medical insurance, NPS investment, home loan deductions, etc. All these options are allowed with old tax regime to save income tax.

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Income Tax Calculator App – FinCalC

For Income Tax Calculation on your mobile device, you can Download my Android App “FinCalC” which I have developed for you to make your income tax calculation easy.

What you can do with this mobile App?

  • Calculate Income Tax for new FY 2024-25 and previous FY 2023-24
  • Enter estimated Investments to check income tax with Old and New Tax Regime
  • Save income tax details and track regularly
  • Know how much to invest more to save income tax
  • More calculators including PPF, SIP returns, Savings account interest and lot more
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Download Income Tax Calculator APP from play store

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