14 Key Strategies on How to Save Tax While Filing ITR

Discover strategic tips to save on your taxes with our detailed guide on filing Income Tax Returns (ITR). Learn about deductions, exemptions, and investment options to legally reduce your tax liability and boost your savings.
Home Loan
2 min
05 September 2025

Filing Income Tax Returns (ITR) can often feel like a complex tax, but with strategic planning and a thorough understanding of tax-saving opportunities, you can significantly reduce your tax liability and boost your savings. Whether you are a salaried employee, a business owner, or a professional, knowing how to optimise your taxes legally can help you retain more of your hard-earned money. With this comprehensive guide we will provide you tips on how to save tax while filing ITR, covering everything from investments and deductions to exemptions and financial products that offer significant tax benefits.

1. Utilise Section 80C deductions

Section 80C of the Income Tax Act allows for deductions up to Rs. 1.5 lakh on various investments and expenses. Here are some common ways to utilise this section:

  • Public Provident Fund (PPF): Contributions to PPF are eligible for tax deductions under Section 80C. The interest earned is also tax-free.
  • Employee Provident Fund (EPF): Contributions made by you and your employer to the EPF can be claimed as deductions.
  • National Savings Certificate (NSC): Investments in NSC are eligible for deductions, and the interest earned is taxable.
  • Equity Linked Saving Schemes (ELSS): These mutual funds offer tax benefits and potential for capital appreciation.
  • Life insurance premiums: Premiums paid for life insurance policies for yourself, spouse, and children can be deducted under Section 80C.
  • Home loan principal repayment: The principal portion of your home loan EMI is eligible for deduction under Section 80C.

By opting for a home loan from financial institutions like Bajaj Finserv, you can avail of attractive interest rates and customised repayment options, enhancing your overall tax savings. If you're planning to purchase a home and want to maximise your tax benefits while securing competitive interest rates, consider exploring home loan options from Bajaj Finserv. Check your eligibility for a home loan that could help you save on taxes while achieving your homeownership goals. You may already be eligible, find out by entering your mobile number and OTP.

2. Claim deductions under Section 80D

Section 80D provides deductions for health insurance premiums. You can claim:

  • Rs. 25,000 for premiums paid for yourself, spouse, and dependent children.
  • Rs. 50,000 for premiums paid for senior citizen parents.
  • Additional deduction of Rs. 5,000 for preventive health check-ups.

3. Take advantage of Section 24(b)

Section 24(b) allows for deductions on the interest paid on home loans. You can claim:

  • Up to Rs. 2 lakh for a self-occupied property.
  • The entire interest amount for a let-out property, which can significantly reduce your tax liability.

Planning to buy your first home or invest in property? A home loan from Bajaj Finserv can help you claim substantial tax deductions under Section 24(b) while offering attractive interest rates starting from 7.45%* p.a Check your loan offers to see how much you could save on both taxes and interest payments. You may already be eligible, find out by entering your mobile number and OTP.

4. Avail the benefits of Section 80E

If you have taken an education loan for higher studies, the interest paid on such a loan can be claimed as a deduction under Section 80E. This deduction is available for a maximum of 8 years or until the interest is fully repaid, whichever is earlier.

5. Utilise House Rent Allowance (HRA)

If you are a salaried individual receiving House Rent Allowance (HRA), you can claim a deduction on the rent paid. The amount of deduction will be the least of the following:

  • Actual HRA received.
  • 50% of your salary (if living in a metro city) or 40% (if living in a non-metro city).
  • Rent paid minus 10% of your salary.

6. Section 80G: Donations to charitable institutions

Donations made to specified charitable institutions and relief funds can be claimed as deductions under Section 80G. Depending on the institution, the deduction can be either 50% or 100% of the donation amount.

7. National Pension System (NPS)

Contributions to the National Pension System (NPS) are eligible for tax deductions:

  • Up to Rs. 1.5 lakh under Section 80C.
  • An additional Rs. 50,000 under Section 80CCD(1B).
  • NPS is a great way to save for retirement while enjoying tax benefits.

8. Interest on savings account: Section 80TTA and 80TTB

  • Under Section 80TTA, you can claim a deduction of up to Rs. 10,000 on interest earned from savings accounts.
  • Senior citizens can claim a deduction of up to Rs. 50,000 on interest earned from savings accounts, fixed deposits, and recurring deposits under Section 80TTB.

9. Tax benefits on home loans

Home loans not only provide the benefit of owning a home but also offer significant tax savings.

  • Principal repayment (Section 80C): As mentioned earlier, the principal portion of your home loan EMI is eligible for deduction up to Rs. 1.5 lakh.
  • Interest payment (Section 24): Interest paid on home loans can be claimed up to Rs. 2 lakh for self-occupied property.

By opting for a home loan from financial institutions like Bajaj Housing Finance, you can avail of attractive interest rates and customised repayment options, enhancing your overall tax savings. Check your eligibility for competitive rates and comprehensive tax benefits. You may already be eligible, find out by entering your mobile number and OTP.

10. Fixed deposits and tax-saving instruments

  • Tax-saving fixed deposits: Investments in tax-saving fixed deposits with a 5-year lock-in period are eligible for deductions under Section 80C.
  • Senior Citizen Savings Scheme (SCSS): This is another investment option for senior citizens, providing tax benefits under Section 80C.

11. Invest in health insurance

Health insurance not only secures your health but also offers tax benefits. Premiums paid for health insurance policies can be claimed under Section 80D as discussed earlier. Opting for a comprehensive health insurance plan from reputed insurers ensures you get the best coverage along with tax benefits.

12. Consider tax-free bonds

Interest earned from tax-free bonds issued by government organizations is exempt from tax. These bonds are a good investment option for individuals in higher tax brackets, offering decent returns with no tax liability on the interest earned.

13. Tuition fees

Tuition fees paid for up to two children can be claimed as a deduction under Section 80C. This includes payments made towards full-time education at any school, college, or university in India.

Other topics you might find interesting

Income Tax Notice Section 142 1​

Section 80CCD 2 of Income Tax Act

Section 194H of Income Tax Act

Section 80CCD 1 of Income Tax Act

Section 148 of Income Tax Act

Section 80GGC of Income Tax Act

Section 80DD of Income Tax Act

Section 80E of Income Tax Act

Home Loan Interest Deduction

Section 80CCD 1B of Income Tax Act

Section 80DDB of Income Tax Act

Section 80G of Income Tax Act

56 2 X of Income Tax Act

Section 194IA of Income Tax Act

Section 80EEA of Income Tax Act

Section 80GG Deduction of Income Tax Act

Section 89 of Income Tax Act

Section 17 of Income Tax Act

Section 80TTA Deduction of Income Tax Act

Section 179 of Income Tax Act

139 9 of Income Tax Act

Section 80CCE of Income Tax Act

Section 80U of Income Tax Act

Section 54B of Income Tax Act

14. Save on capital gains

By investing in specified instruments, you can save on capital gains tax:

  • Section 54EC: Invest in bonds issued by NHAI and REC to save on long-term capital gains from the sale of property.
  • Section 54F: Reinvesting the sale proceeds from a long-term capital asset into a residential house can help you save on capital gains tax.

Saving tax while filing your ITR requires careful planning and strategic investments. By understanding and utilizing the various sections of the Income Tax Act, you can significantly reduce your tax liability. Remember to keep proper documentation for all your investments and expenses to ensure a smooth and hassle-free filing process. As you plan your tax-saving investments for the year ahead, consider how homeownership can significantly boost your tax savings through deductions on both principal and interest payments. With Bajaj Finserv offering loans up to Rs. 15 Crore* and interest rates starting from 7.45%* p.a, you can achieve dual benefits of wealth creation and tax optimisation. Check your loan offers to discover how much you could save. You may already be eligible, find out by entering your mobile number and OTP.


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Frequently asked questions

How can I save tax on my salary while filing ITR?
You can save tax on your salary by claiming deductions under sections like 80C for investments, EPF, PPF, NSC, ELSS, life insurance premiums, and home loan principal repayment. Utilising HRA benefits, investing in NPS, and availing tax benefits on home loans can also help.
How can I save on my income tax return?
To save on your income tax return, consider claiming deductions under various sections for investments, insurance premiums, home loan repayments. Take advantage of tax-saving schemes such as EPF, NSC, ELSS, and utilise HRA benefits if applicable. Remember, a well-planned investment strategy is key.
How to save 100% income tax?

It is possible to reduce your taxable income to almost zero by making full use of the deductions available under the Income Tax Act. Popular options include investing in PPF, ELSS, NPS, NSC, tax-saving fixed deposits, or Sukanya Samriddhi Yojana. You can also claim benefits for premiums paid on life and health insurance, repayment of the principal on home loans, and contributions towards employee provident fund or voluntary provident fund.

Who has to pay 42% tax in India?

The highest tax rate in India applies only to individuals in the very high-income bracket. For those earning between Rs. 2 crore and Rs. 5 crore, the maximum rate goes up to around 39%. If annual income crosses Rs. 5 crore, the rate climbs to about 42.74%, which includes surcharge and cess. This is the steepest tax burden in the country and is applicable only to ultra-high earners.

How is Rs. 12 lakh salary tax free?

Under the new tax system, individuals earning up to Rs. 12 lakh can enjoy complete relief from paying tax. For salaried taxpayers, this limit extends to Rs. 12.75 lakh due to the standard deduction. Additionally, rebate under Section 87A ensures that the tax payable on incomes slightly above Rs. 12 lakh does not exceed the additional amount earned, effectively keeping income up to this limit free of tax liability. If you're in this income bracket and considering buying a home, you can further optimise your tax planning with a home loan from Bajaj Finserv, which offers additional deductions under Section 80C and 24(b). Check your eligibility for attractive home loan rates that complement your tax-free income status. You may already be eligible, find out by entering your mobile number and OTP.

Whose salary is tax free?

The finance minister announced a significant benefit for middle-class taxpayers under the new regime. Salaries up to Rs. 12 lakh per year (equivalent to about Rs. 1 lakh monthly income) are completely exempt from income tax. This exemption applies only to regular income and not to special categories such as capital gains. The change is aimed at making tax relief more accessible and reducing the financial burden on salaried individuals.

Can I file ITR without paying tax?

Yes, the Income Tax Department now allows taxpayers to file their returns first and settle any due tax later. This “pay later” feature is particularly useful for people who may be awaiting salary credits or income from other sources. Earlier, filing was possible only after full payment of outstanding taxes. The change provides greater flexibility and ensures that individuals do not miss the filing deadline due to payment delays.

How to pay zero tax?

You can legally reduce your tax liability to zero by carefully planning your finances. First, claim the standard deduction available to salaried taxpayers. Then use deductions under Section 80C for investments like ELSS or PPF, along with benefits on housing loan repayments and health insurance premiums. Section 87A rebate can also eliminate tax for incomes below a certain level. Combining these provisions can bring taxable income down to nil.

How can a salaried person save taxes?

A salaried person can save on taxes by using the exemptions and deductions provided under the law. House Rent Allowance (HRA) exemptions and home loan benefits are common ways to reduce taxable income. Section 80C is another major avenue, allowing up to Rs. 1.5 lakh deduction on investments like PPF, ELSS, and life insurance. Additionally, health insurance premiums and contributions to NPS also help lower the overall tax burden effectively. For salaried individuals looking to maximise tax benefits, purchasing a home through Bajaj Finserv can provide substantial deductions while building long-term wealth. With EMIs starting at just Rs. 684/lakh* and tenure up to 32 years, you can comfortably manage your tax planning alongside homeownership goals. Check your loan offers for the best rates and tax benefits. You may already be eligible, find out by entering your mobile number and OTP.

How to pay zero tax on salary of Rs. 30 lakh?

Even with a salary as high as Rs. 30 lakh, it is possible to minimise or completely offset tax liability by maximising deductions. Some key provisions include Rs. 1.5 lakh under Section 80C, deductions for health insurance premiums under Section 80D, and education loan interest under Section 80E. Charitable donations, home loan interest, NPS contributions, and HRA exemptions further reduce taxable income. Smart investment planning is essential here.

What are the disadvantages of ITR?

Filing your Income Tax Return after the due date can have several drawbacks. You may have to pay a late fee under Section 234F and additional interest under Section 234A if tax is unpaid. Delayed filing also prevents you from carrying forward certain losses and may result in slower refunds. It can increase the risk of scrutiny and legal notices, limit revision options, and even impact loan or visa approvals negatively.

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