Introduction: Why Tax-Saving Investment Planning Is Necessary for Salaried Employees in Today’s Tax Pandemic
Nowadays, the Indian government keeps introducing new tax rules from time to time, and income tax is one of these rules that keep changing from time to time. In such a situation, a good part of our income goes into tax, affecting our financial status.
But if we want, we can save our tax legally by making some tax-saving investments. All that is required is to plan with the right strategy and invest some part of your income in tax-saving investments. So that we can reduce our tax burden and take home as much of our income as possible.
Today we are going to do a detailed comprehensive guide on these issues in which we will be able to know such saving strategies which are designed only for salaried individuals. Whether you are a graduate from studies and have a job or an experienced employee, you can retain more money with these tax-saving investments:
1. Maximum benefit under Section 80C (₹1.5 lakh deduction)
Section 80C of the Income Tax Act is a great way of tax-saving, allowing income tax exemption of up to ₹1.5 lakh. Below are some of the saving schemes that come under 80C:
✅ Employee Provident Fund (EPF) – Mandatory for salaried employees, EPF contribution is eligible for deduction. It is deducted from your salary and deposited in EPF which is completely tax-free.
✅ Public Provident Fund (PPF) – Government-backed, tax-free investment with a lock-in period of 15 years. You can start this scheme in any bank or post-office.
✅ National Savings Certificate (NSC) – A safe investment with a tenure of 5 years and guaranteed returns. This too can be opened in any bank or post-office.
✅ Equity-linked savings scheme (ELSS) – Mutual funds with tax-saving benefits and a lock-in period of 3 years.
✅ Life insurance premium – Premiums paid for term or endowment policies are tax deductible.
2. Take advantage of the deduction under section 80D (Health Insurance Premium)
Nowadays, we are getting more and more medical or health services, so if we reach the hospital, we have to face a very hefty bill. In such a situation, getting health insurance is beneficial for us in both ways. On one hand, we do not have to worry about the hospital bill, on the other hand, we also get income tax exemption on health insurance premiums under the Income Tax Act Section 80D, a tax-saving investment:
🏥 ₹25,000 – For self, spouse and children.
🏥 ₹50,000 – If you are paying for parents (above 60 years).
🏥 ₹1 lakh – Maximum possible deduction if both you and the parents are senior citizens.
📌 Pro tip: Preventive health check-ups can also help you save ₹5,000 under Section 80D.
3. Save tax on house rent allowance (HRA)
If a salaried employee is on rent, he can avail house rent allowance under Section 10(13A) of the Income Tax Act. You can use HRA as a Tax-Saving Investment that allows you to save your money and get tax exemption.
🏡 HRA exemption is calculated as the lowest of the following:
1️⃣ Actual HRA received from the employer.
2️⃣ 50% of salary (for metro cities) or 40% (for non-metro cities).
3️⃣ Rent paid less 10% of basic salary.
📌 Pro tip: If you don’t get HRA but still pay rent, you can avail up to ₹60,000 under Section 80GG.
4. Avail tax benefits on home loans (Section 80C & 24B)
If anyone buys a home by taking a home loan, then tax exemption is also given on home loans under the Income Tax Act Section 80C & 24B. This is also a beneficial tax-saving investment for those who are paying higher rent for a home and planning to buy their own house as per their budget:
🏠 Under Section 80C – Claim up to ₹1.5 lakh on principal repayment.
🏠 Under Section 24B – Claim up to ₹2 lakh on home loan interest payment.
🏠 Section 80EEA – First-time homebuyers get an additional deduction of ₹1.5 lakh.
📌 Pro tip: If you and your spouse have a joint home loan, both can claim these deductions separately!
5. Invest in National Pension System (NPS) for additional deduction
National Pension System (NPS) is also a good example of income tax exemption in which you can secure your retirement. It is the most valuable Tax-saving investment scheme that will support you after retirement. However, You can read more details about NPS, click here. Under NPS:
👴 Section 80CCD(1) – Deduction up to ₹1.5 lakh (part of 80C limit).
👴 Section 80CCD(1B) – Additional deduction of ₹50,000 beyond 80C.
👴 Section 80CCD(2) – Employer’s NPS contribution is also tax-free up to 10% of salary.
📌 Pro tip: Investing in NPS can reduce taxable income beyond the 80C limit, making it a great option for high-salary individuals.
6. Claim Leave Travel Allowance (LTA) exemption
Salaried employees can claim tax exemption under Section 10(5) of the Income Tax Act under Leave Travel Allowance which includes:
✈️ Covers domestic travel costs for self and family (spouse, children, dependent parents/siblings).
✈️ Can be claimed twice in a block of four years.
📌 Pro tip: Keep all travel bills and book economy class tickets for maximum tax benefits.
7. Use standard deduction and other allowances
From FY 2023-24, salaried employees get an automatic standard deduction of ₹50,000, reducing taxable income by ₹50,000. The choosing right tax regime is a wise manner of tax-saving investment that will help you to save more money.
Other tax-free allowances include:
💼 Food coupons/Sodexo – Up to ₹50 discount per meal.
💼 Mobile and internet reimbursement – Claim expenses incurred for work.
💼 Books and magazines allowance – Covers work-related reading material.
📌 Pro tip: Ensure all claims have valid bills to avoid scrutiny during tax assessment.
📊 [Insert table: Tax-free allowances for salaried employees]
8. Opt for the Right Tax Regime: Old vs. New
Since Budget 2023, the new tax regime has lower tax rates but fewer deductions. Compare both before filing:
| Income Slab (2022-2023) | Income Slab (2023-2024) | Income Slab (2024-2025) |
| Up to ₹2.5L => NIL | Up to ₹3L => NIL | Up to ₹4L => NIL |
| ₹2.5L – ₹5L => 5% | ₹3L – ₹6L => 5% | ₹4L – ₹8L => 5% |
| ₹5L – ₹7.5L => 10% | ₹6L – ₹9L => 10% | ₹8L – ₹12L => 10% |
| ₹7.5L – ₹10L => 15% | ₹9L – ₹12L => 15% | ₹12L – ₹16L => 15% |
| ₹10L – ₹12.5L => 20% | ₹12L – ₹15L => 20% | ₹16L – ₹20L => 20% |
| ₹12.5L – ₹15L => 25% | ₹15L – ₹20L => 25% | ₹20L – ₹24L => 25% |
| Above ₹15L => 30% | Above ₹20L => 30% | Above ₹20L => 30% |
📌 Pro Tip: If you claim many deductions, the old regime is better. Otherwise, opt for the new regime.
📊 [Insert Decision Flowchart: Which Tax Regime Should You Choose?]
Conclusion: Smart tax planning = more savings and wealth creation
Tax-saving investment planning is not just about saving money or saving taxes. Still, it is a great way to secure your future by investing the above-mentioned tax-saving investment in a way that benefits you in both ways. Firstly, you save the part of your income that goes as tax by making tax-saving investments. Second, some of the money you invest in tax-saving investments is also a long-term investment that gives you an incredible return in the long run that secures your future financially. And that’s how you will not depend on others when you get older.
🚀 Also Read How to make money online in India.
📥 Download our free tax-saving checklist to ensure you don’t miss out on any deductions.
💬 Join the discussion: Share your best tax-saving tips in the comments!
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