How to Plan Taxes for Salaried Employees?
Effective tax planning helps you reduce liability and maximise savings. Here’s a step-by-step approach to manage your taxes efficiently:
1. Understand Your Tax Slab
Start by identifying the tax regime and slab applicable to your income.
New Tax Regime (FY 2025–26)
- Up to Rs. 4 lakh – Nil
- Rs. 4 lakh to Rs. 8 lakh – 5%
- Rs. 8 lakh to Rs. 12 lakh – 10%
- Rs. 12 lakh to Rs. 16 lakh – 15%
- Rs. 16 lakh to Rs. 20 lakh – 20%
- Rs. 20 lakh to Rs. 24 lakh – 25%
- Above Rs. 24 lakh – 30%
A rebate of up to Rs. 60,000 is available for resident individuals with income up to Rs. 12 lakh.
Old Tax Regime
- Up to Rs. 2.5 lakh – Nil
- Rs. 2.5 lakh to Rs. 5 lakh – 5%
- Rs. 5 lakh to Rs. 10 lakh – 20%
- Above Rs. 10 lakh – 30%
2. Use Section 80C Deductions
You can claim deductions up to Rs. 1.5 lakh under Section 80C (old regime). Popular options include:
- EPF and PPF
- ELSS mutual funds
- Life insurance premiums
- NSC and home loan principal repayment
3. Claim Health Insurance Benefits (Section 80D)
Premiums paid for health insurance are eligible for deduction:
- Up to Rs. 25,000 for self and family (Rs. 50,000 for senior citizens)
- Additional Rs. 25,000 for parents (Rs. 50,000 if senior citizens)
- Preventive check-ups up to Rs. 5,000 within limits
4. Claim HRA (House Rent Allowance)
If you live in rented accommodation, HRA exemption can be claimed. The exempt amount is based on:
- Actual HRA received
- Rent paid minus 10% of salary
- 50% (metro) or 40% (non-metro) of salary
If HRA is not received, deduction under Section 80GG may apply.
5. Deduction on Education Loan (Section 80E)
Interest paid on education loans is fully deductible for up to 8 years or until repayment is complete.
6. Save More with NPS (Section 80CCD)
NPS offers additional tax benefits:
- Up to Rs. 1.5 lakh under Section 80CCD(1) (within 80C limit)
- Extra Rs. 50,000 under Section 80CCD(1B)
- Employer contribution under Section 80CCD(2) (over and above limits)
7. Standard Deduction
- Rs. 50,000 under the old regime
- Rs. 75,000 under the new regime
This is automatically applied for salaried individuals and pensioners.
8. Claim Leave Travel Allowance (LTA)
LTA exemption can be claimed for travel expenses within India. It is allowed for two journeys in a block of four years (old regime only).
9. Use Tax-Free Allowances
Certain employer benefits can reduce taxable income, such as:
- Meal vouchers
- Telephone and internet reimbursements
- Uniform allowances
10. File Your ITR on Time
Always file your income tax return before the due date to avoid penalties, interest, and compliance issues.
Tax Planning Tips for Salaried Employees
Here are some actionable steps to strengthen your tax plan:
1.Invest early in the financial year
Start saving from April, not March. It reduces last-minute stress and gives your investments more time to grow.
Not sure where to begin?
A Bajaj Finance FD is ideal for first-time savers—start with just Rs. 15,000 and pick a tenure between 12 to 60 months.
Check FD Rates and calculate how much you can earn.
2. Keep all documents ready
Maintain proof for all deductions—medical insurance, loan interest, investment declarations—to avoid rejections during verification.
3. Review your portfolio annually
Ensure your tax-saving instruments are aligned with your goals. You might need to switch strategies depending on life changes or income growth.
4.Utilise employer benefits
Don’t miss out on perks like Leave Travel Allowance (LTA), meal coupons, or accommodation support—these can reduce your taxable salary if structured correctly.
5. Get expert help when needed
A financial advisor can personalise your tax-saving strategy, especially if your income has changed, or if you're juggling multiple deductions.
