How Can We Save Tax on Salary?

Every rupee you save in taxes is a rupee you can invest in your future. If you are a salaried professional in India, you have several smart and legal ways to reduce your tax liability. The Income Tax Act offers multiple deductions, exemptions, and investment options that can help you grow your wealth while paying less tax.

Let us explore how strategic tax planning can increase your take-home income—and help you hit your long-term financial goals.

Why tax planning matters for salaried employees

When done right, tax planning does not just reduce your income tax—it builds financial discipline. The key is to start early, understand the available deductions, and align your tax-saving actions with your overall financial goals.

From claiming deductions on health insurance and home loans to investing in tax-saving mutual funds, there is a lot you can do.

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Top Tax-Saving Options for Salaried Employees

Here are some of the most effective ways to save tax under the Income Tax Act:

1. Invest under Section 80C (Up to Rs. 1.5 lakh)

Use this to invest in instruments like:

• Public Provident Fund (PPF)
• Employee Provident Fund (EPF)
• National Savings Certificate (NSC)
• ELSS (Equity-Linked Savings Scheme)

ELSS mutual funds not only save tax but also offer market-linked returns—great for long-term growth.

2. Health Insurance Premiums (Section 80D)

You can claim deductions on premiums paid for:

• Self and family (up to Rs. 25,000)
• Parents (up to Rs. 50,000 if senior citizens)

3. Home Loan Deductions

• Up to Rs. 2 lakh on interest paid (Section 24b)
• Additional Rs. 50,000 for first-time homebuyers (Section 80EE)

4. Contribute to NPS (Section 80CCD(1B))

Get an extra Rs. 50,000 deduction—over and above the Rs. 1.5 lakh 80C limit. A smart way to build your retirement fund.

5. Standard Deduction

All salaried individuals get a flat Rs. 50,000 deduction—no proof or investment needed.

Looking to save and grow your money at the same time?Explore low-risk, high-return (up to 8.60% p.a.) options like Bajaj Finance Fixed Deposits. Open FD Account.

Practical Tax-Saving Tips for Salaried Professionals

1. Use House Rent Allowance (HRA)

If you live in rented housing, you can claim tax exemption on your HRA. Just keep rent receipts and a rental agreement handy.

2. Claim Leave Travel Allowance (LTA)

Travel within India with your family? You can claim LTA for those expenses—just ensure it's part of your salary structure.

3. Use Reimbursements & Allowances

Things like:

• Telephone/internet bills
• Meal coupons
• Fuel reimbursementsThese can be tax-exempt if structured properly by your employer.

4. Education Loan Interest (Section 80E)

Taking a loan for higher education? The entire interest amount is deductible with no upper limit.

5. Donate Smartly (Section 80G)

Support a good cause and save tax. Donations to approved charities are eligible for 50% or 100% deductions.

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Also read: How to calculate taxable income

Final Thoughts: Tax Planning = Smart Earning

Tax planning isn’t just about saving money—it’s about making your income work harder for you.
By using the right mix of deductions, investments, and allowances, you can boost your savings and secure your financial future.

Start early, document everything, and if needed, consult a tax advisor. Because the best time to plan your taxes is now—not at the end of the financial year.

Want to grow your tax savings?Start earning up to 8.60% p.a. with Bajaj Finance Fixed Deposits. Check FD Rates.

Calculate your expected investment returns with the help of our investment calculators.

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