Tax time can be confusing, especially for people who earn a salary in India. But don’t worry! Knowing the different ways to save on taxes can help you pay less and keep more money for yourself. In this blog, we will look at easy ways on how to save tax on salary income in India. We’ll make everything simple and clear so you can understand it easily!

Understanding the Basics of Income Tax in India

Before we talk about how to save tax on salary income in India, let’s understand what income tax is. Income tax is money that the government takes from your earnings. In India, if you earn more money, you pay a higher percentage of tax. Here’s how it works for people under 60 years old:

Additionally, there’s a health and education cess of 4% on your total tax liability.

Key Strategies to Save Tax on Salary Income

1. Opt for the Right Tax Regime
   • Old Tax Regime: This plan lets you take advantage of different deductions and exemptions. This means you can lower the amount of money you have to pay in taxes by using certain rules.
   • New Tax Regime: This plan has lower tax rates, but you can’t claim as many deductions.
2. Utilize Deductions Under Section 80C
   • You can claim deductions up to ₹1.5 lakh through investments in:
     • Public Provident Fund (PPF)
     • Employees’ Provident Fund (EPF)
     • Equity Linked Savings Scheme (ELSS)
     • National Pension Scheme (NPS)
3. Claim House Rent Allowance (HRA)
   • If you live in a rented house, you can save some money on your taxes by claiming something called HRA claim under Section 10(13A) , which stands for House Rent Allowance. This is a special rule that helps you pay less tax.
4. Health Insurance Premiums (Section 80D)
   • You can claim deductions for premiums paid for health insurance for yourself, your spouse, children, and parents. The maximum deduction is ₹25,000 (₹50,000 for senior citizens).
5. Education Loan Interest (Section 80E)
   • If you have an education loan for your studies, you can save money on taxes. You can claim a deduction for the interest you pay on that loan. There’s no limit to how much interest you can claim, so it helps lower your taxable income!
6. Invest in National Pension Scheme (NPS)
   • Contributions to NPS are eligible for an additional deduction of ₹50,000 under Section 80CCD(1B), over and above the ₹1.5 lakh limit of Section 80C.
7. Take Advantage of Standard Deduction
   • A standard deduction of ₹50,000 is available for salaried individuals under both tax regimes.
8. Utilize Leave Travel Allowance (LTA)
   • If your employer provides LTA, you can claim it for travel expenses incurred during leave.
9. Claim Children Education Allowance
   • You can claim a deduction of ₹100 per month per child (up to two children) under this allowance.
10. Make Charitable Donations (Section 80G)
    • Donations made to specified charitable organizations are eligible for deductions ranging from 50% to 100%.

Additional Tips to Maximize Your Tax Savings

• Plan Early: It’s a good idea to start thinking about where to put your money at the beginning of the year. This way, you can make smart choices and save more on taxes.
• Keep Records: Always write down and save important papers for anything you want to claim or get a deduction for. This helps you remember everything when it’s time to pay taxes.
• Consult a Tax Professional: If your money situation is a bit tricky or confusing, it’s smart to talk to a tax expert. They can give you special advice just for you, helping you understand how to save even more!

Conclusion

Saving tax on salary income in India is easier than you might think! You can use different deductions and exemptions, which are special rules that help you pay less tax. This means you can lower the amount of money the government takes from your earnings and keep more for yourself.