Introduction Every year, salaried individuals and business owners in India look for legitimate ways to reduce their income tax burden. With the right planning and awareness, you can save a substantial amount of tax using legal deductions, exemptions, and investment schemes provided under the Income Tax Act. In this blog, we share the most effective and legal methods to save tax in India for the financial year 2024-25.
1. Claim Deductions under Section 80C Section 80C offers deductions of up to Rs. 1.5 lakh on various investments and expenses. Some of the most popular tax-saving instruments under this section include:
Public Provident Fund (PPF)
Employee Provident Fund (EPF)
Equity-Linked Saving Scheme (ELSS)
Life Insurance Premiums
Tax-saving Fixed Deposits (5 years)
Principal repayment on home loans
Children’s tuition fees
Tip: ELSS offers the dual benefit of tax saving and wealth creation through market-linked returns.
2. Invest in National Pension Scheme (NPS) – Section 80CCD(1B) In addition to the Rs. 1.5 lakh limit under Section 80C, you can claim an extra Rs. 50,000 by investing in NPS under Section 80CCD(1B). This helps in long-term retirement planning while saving tax.
3. Claim Health Insurance Premium under Section 80D Health insurance premiums for self, spouse, children, and parents are eligible for deduction under Section 80D:
Up to Rs. 25,000 for self, spouse, and children
Additional Rs. 25,000 for parents (below 60 years)
Rs. 50,000 if parents are senior citizens
4. Deduction for Education Loan Interest – Section 80E Interest paid on education loans for higher studies (in India or abroad) is eligible for a deduction under Section 80E for up to 8 years. There is no upper limit on the amount of interest.
5. House Rent Allowance (HRA) If you live in a rented house and receive HRA as part of your salary, you can claim an exemption based on:
Rent paid minus 10% of salary
50% of salary in metro cities or 40% in non-metros
Actual HRA received
Whichever is least of the above is exempt from tax.
6. Home Loan Benefits – Section 24(b) and 80EEA
Section 24(b): Claim deduction up to Rs. 2 lakh on interest paid on home loan (for self-occupied property).
Section 80EEA: Additional deduction up to Rs. 1.5 lakh for first-time home buyers (conditions apply).
7. Standard Deduction for Salaried Employees Salaried individuals and pensioners can claim a standard deduction of Rs. 50,000 automatically, without needing to submit any investment proofs.
8. Use the New vs Old Tax Regime Comparison The new tax regime (introduced in FY 2020-21) offers lower tax rates but without exemptions. Calculate your tax liability under both regimes to find which one is more beneficial for you.
Conclusion Saving tax is not about hiding income but about being aware of the legal ways provided under the Income Tax Act. Proper planning, timely investments, and awareness about applicable deductions can help you reduce your tax burden significantly. Always consult a qualified tax advisor to create a personalized tax-saving plan.
Keywords: how to save tax in India, tax saving options 2025, income tax deductions India, best tax saving schemes, save tax legally, tax planning tips
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