Learn effective techniques for saving on income tax in India, from house loans and account restrictions to PF/PPF and ELSS. Using sensible advice (old vs. new regime) and real-world examples, this beginner-friendly guide shows how students, professionals, and early investors (18–35) can maximise income tax reductions.
Navigating income tax saving in India requires careful application of investments and deductions. All told, this book addresses common choices (EPF, PPF, ELSS, etc.), account restrictions, and house loan benefits—all in easy terms.
Investing wisely is the first step towards reducing tax liabilities. Under Section 80C of the Income Tax Act, individuals can claim deductions on popular instruments that amount to a maximum of ₹1.5 lakh per year. Investing in Employee Provident Funds (EPF) or Public Provident Funds (PPF) or making tax-saving deposits for a period of five years are all examples of options that fall under Section 80C. Equity-Linked Savings Scheme (ELSS) mutual funds, commonly known as income tax saving mutual funds, are another option for investing. These funds have a lock-in period of three years. Investing in these choices is a risk-free approach to gaining wealth while minimising tax liabilities. To be more specific, Section 80C “provides deductions for a wide variety of investments and expenditures, including but not limited to the Public Provident Fund (PPF), Equity Linked Saving Schemes (ELSS), and principal repayment of home loans.”
There is a lock-in period of 15 years for both the Public Provident Fund (PPF) and the Employee Provident Fund (EPF). Deposits of up to ₹1.5 lakh per year, when combined with other 80C deductions, are eligible for deduction.
Investments can be made through a systematic investment plan (SIP) with a lock-in period of three years, with equity returns ranging from 10 to 10–15% historically. This website is. Although it is market-linked, it is beneficial for larger returns.
There is also the possibility of claiming a deduction under Section 80C for premiums paid to ULIPs or term life insurance policies. (This tool is helpful if you require life insurance in addition to a tax benefit..
NSC stands for National Savings Certificate, which is a government bond that is valid for five years and offers a return of approximately seven to eight per percent.
Section 80C deducts the principal you repay on your house loan from your taxable income, up to a limit of 1.5L.
A total of ₹1,50,000 is the maximum amount that can be deducted under section 80C. You can maximise your income tax savings by simulating these assets with the assistance of some banks or using certain instruments, such as a tax calculator.
Other Key Deductions and Limits
There are other ways to cut taxes beyond 80C.
Deductible are health insurance premiums (₹25,000 for self or family, an additional ₹25,000 for parents).
Section 80E, Education Loan Interest: Deduct 100% of loan interest without a cap.
Over and beyond the ₹1.5L cap, an additional ₹50,000 deduction under Sec 80CCD(1B) for investing in the National Pension System (NPS).
Interest up to ₹10,000 annually from savings accounts is tax-exempt under Section 80TTA. Interest exceeding ₹10,000 is taxed as “Income from Other Sources.”
Senior people under Sec 80TTB have up to ₹50,000 deduction on total interest (savings, FDs).
Remember, Section 80TTA lets young taxpayers deduct up to ₹10,000 on savings interesttax2win.inindialends.com. Any interest above that must be declared under “Income from Other Sources.” We’ll cover this in FAQs below.
Tax Savings for Salaried Professionals
When you have a salary, you canof allowances and exemptions:
An automatic deduction under section 80C is made from your portion of the Employee Provident Fund (EPF), which is equal to twelve percent of your basic pay. Ask HR if there is any way to raise the amount of voluntary PF!
House Rent Allowance (HRA)—If you are living on rent, you are eligible to claim a deduction for HRA (the amount claimed is limited by the city and the amount of rent paid). Maintain receipts for rent payments and note all of thisnote all.
You are eligible to receive Leave Travel Allowance (LTA) for travel expenditures if you claim it twice within a period of four years (for yourself and your family, subject to certain restrictions).
The standard deduction is a deduction of ₹50,000 from an individual’s pay, which has been implemented recently. This dedurecentlytely automatic for all salaried workers.
You can deduct a variety oYou can deduct a variety of taxes, including professional taxes if necessary. allowance that you receive is also important.
By utilizing these salary-specific deductions, you can significantly reduce your taxable income. An example of these deductions is the Human Resources Allowance (HRA) and the Leave Tax Allowance (LTA), both of which are tax-saving benefits exclusive to salaried individuals. To claim, you must always produce documentation (such as invoices for rent or travel expenses) when you file your return.
New Tax Regime vs Old Tax Regime
There are now two different tax regimes in India: the old one, which has a large number of exemptions, and the new one, which has lower rates and fewer deductions. For the purpose of tax planning, familiarity with them is essential. Most of the regular deductions have been eliminated as a result of the new tax system. This means that you will not be able to take advantage of the ₹1.5L 80C benefit (PPF, ELSS, etc.) if you choose to go with the new rates. For instance, “No, the new tax regime does not allow any deductions under Section 80C.” You also give up your health reimbursement account (HRA), health insurance, savings interest, and other benefits. A few deductions, such as the employer’s contribution to the National Pension System (NPS) (Section 80CCD(2)) and the expanded standard deduction (₹75,000 in FY2024-25), are still available.
Advice: Compare the tax liability in both directions. It is possible that the previous tax system will save you more money on taxes if you have significant HRA claims or investments under 80C. If this is not the case, the new regime’s slabs, which are more straightforward, would be preferable. To enter your data, your best bet is to make use of an income tax calculator (affiliated products such as a TaxBuddy calculator).
Home Loan Tax Benefits
Acquiring a home loan offers two tax breaks:
interest and principal. For a self-occupied house, under Section 24, you may write off up to ₹200,000 a year on the interest you have paid. After 80C, this is among the biggest deductions. Any principal repayments also fall under 80C (towards the ₹1.5L maximum).
For instance, you may deduct ₹3.5L overall (₹1.5L under 80C and ₹2L under Section 24) if you pay ₹1.5L principal along with ₹2.0L interest in a year.
First-time homeowners may also benefit from additional deductions (Sec 80EE/80EEA) for interest if they meet the requirements, which include loan and property restrictions.
When you are completing your taxes, you should always make sure that you have your home loan bills and interest certificates on hand. If you want to considerably lower your taxable income, you should claim these deductions in the “Income from House Property” section of your tax return.
Friendly Tax Tips and Next Steps
Start Early: Invest a little amount of your pocket money or pay toward PPF/ELSS/funds. Even an SIP of 500 monthly accumulates over years.
Track your spending. To claim HRA and 80D quickly, pay rent or insurance using UPI or digital applications (keep PAN current).
Sort papers. Before ITR submission, have ready documentation of investments (PPF books, mutual fund statements, insurance premium receipts, house loan interest certificate, and rent receipts).
Remain current. Tax laws evolve every year. See whether new benefits—such as improved standard deduction—apply to you for FY2024–25.
Consider utilizing a tax calculator that is available online or seeking the advice of a certified public accountant for practical assistance. As a helpful explanation of Indian tax planning, we also propose our partner TaxMaster Course, which is an affiliate course that is tied in with the course. It teaches beginners how to budget their money and how to file their taxes.
Frequently Asked Questions (FAQs)
What is income tax?
The government directly levies income tax on the income of an individual or company. It relates to earnings in the form of salaries, profits from businesses, investments, property rentals, and other types of earnings. Taxpayers are required to submit annual returns in which they declare their income and pay any taxes that are applicable according to the income brackets, which are prescribed by law.
What is TDS in income tax?
The acronym TDS stands for “tax deducted at source,” which refers to a system in which a particular proportion of tax is deducted by the payer prior to making various payments, such as rent, interest, commissions, or salary. After that, the tax that was deducted is deposited with the government on behalf of the person who received it.
What is TCS tax?
In the context of the sale of certain goods or services, the term “Tax Collected at Source” (TCS) refers to a system in which a seller collects tax from the customer at the point of sale. The government receives the collected amount while the buyer is filling out their tax return so they can claim it as a tax credit.
What is input tax credit?
Through the use of the Input Tax Credit (ITC), businesses are able to decrease the amount of tax that they pay on sales (output tax) by the amount of tax that they have already paid on purchases (input tax). This method ensures that only the added value at each level of the supply chain is subject to taxation.
What is standard deduction in income tax?
The standard deduction is a predetermined sum that is automatically subtracted from the gross salary income of individuals who are salaried and pensioners or who are retired. In India, for instance, the amount is ₹50,000 for the fiscal year 2024–25. Accounting for taxes is made easier, and taxable income is decreased as a result.
How much income is tax-free?
Under the old tax system, income up to ₹2.5 lakh is tax-free; under the new tax system, the exemption level is ₹3 lakh. Under the former system, the tax-free maximum for senior citizens (aged 60 to 80) rises to ₹3 lakh; for super senior citizens (beyond 80), it is ₹5 lakh. These fundamental exemption limits apply before calculating any refunds or deductions.
How to calculate income tax?
First, figure your income from all sources—salary, business, property, or investments—then apply income tax calculations for India. Subtract then qualified deductions depending on your chosen tax regime—old or new: those under Section 80C, 80D, or HRA. Apply pertinent income tax slab rates after you have the taxable income. Lastly, add the relevant cess (currently 4%) and any necessary fees. For quick and accurate answers, also utilise an online income tax calculator.
Which tax regime is better?
It is dependent on your income and the deductions that are eligible for which tax system is best. In the event that you make multiple claims for exemptions, such as an HRA, LTA, house loan interest, and deductions under Section 80C or 80D, the previous tax regime might provide you with some further savings. On the other hand, the new tax regime can be more advantageous for you if you favour a streamlined process that is accompanied by lower tax rates and do not claim a significant number of deductions. Always use a tax calculator to evaluate the two different regimes before filing your taxes.
How to save tax?
Under Section 80C—up to ₹1.5 lakh—you can save tax by investing in alternatives including PPF, ELSS, LIC, and EPF. Claiming health insurance (Section 80D), home loan interest (Section 24), and donations (Section 80G) provides additional tax savings. Selecting the correct tax structure—old or new—also helps lower your overall tax outlay.
How to file income tax return?
Get your income documentation, then go on to the official tax e-filing website to file an income tax return. Enter your income and data; send the form online and check your return using OTP or another way. Please keep a copy of the acknowledgement for your records.
How to pay income tax online?
Log in with your PAN to pay income tax online from the official tax e-filing portal. Please enter the details, select a tax payment method, and complete the transaction. Kindly save the payment receipt for your records.
How to pay advance tax online?
It is possible to make an advance tax payment online by going to the income tax filing portal or the authorised bank site, entering your personal identification number (PAN) and payment details, choosing the payment method, and then finishing the transaction. It is important to keep the receipt for the challan.
How to pay property tax online?
Pay property tax online at your local municipality or government’s website. Sign in using your property or account number. Enter the relevant information, verify the amount owed, and choose a payment method like credit/debit card, net banking, or UPI for property tax. Keep a record of the payment confirmation and receipt.
Conclusion
With careful planning, you may maximise the amount of money you save on income taxes, regardless of whether you are a student saving pocket money or a young earner making investments. If you want to keep on track, you should make use of the advice presented above, try out a tax calculator, and think about taking a course on budgeting or money. Both your future self and your wallet will be grateful to you.
The creator of Eco Nivesh, Mohammad Faijan (Faizaan Raza), has a degree in commerce. To assist young Indians in making secure, knowledgeable financial decisions, he writes about personal finance, insurance, taxes, and digital money techniques.
