Tax Savings Guide 2025: Key Deductions Every Salaried Person Should Claim

Under the Income Tax Act of 1961, salaried people in India are eligible to claim a number of deductions that lower their taxable income. These deductions maximize savings and reduce tax obligations. A thorough summary of the possible income tax deductions is provided below:

1. Standard Deduction

All salaried people and seniors are eligible for a flat deduction of ₹50,000. Both the previous tax regime and the new tax regime (effective FY 2023–2024) offer this.

2. Section 10(13A) - House Rent Allowance (HRA)

If they reside in rented housing, salaried people who get HRA as part of their pay may be eligible for an exemption. The least of these is the exemption:

• Received actual HRA
• 40% of earnings in non-metropolitan areas or 50% of pay in metro areas
• 10% of salary is used to pay rent.

3. Section 10(5) - Leave Travel Allowance (LTA)

Employees who travel domestically may be eligible for an LTA exemption:

• Permitted twice in a four-year period.
• Includes coverage for dependent parents/siblings, spouse, children, and oneself.
• Applicable only if LTA is offered by the employer.

4. Section 80C Deductions (Maximum ₹1.5 Lakh)

The most common deduction covers a range of assets and costs:

• EPF, PPF, Life Insurance Premiums
• National Savings Certificate (NSC)
• Five-year bank/post office fixed deposit
• Equity Linked Savings Scheme (ELSS)
• Home Loan Principal Repayment
• Sukanya Samriddhi Yojana (SSY)
• Children's tuition fees (up to two children)

5. Section 80CCD - National Pension System (NPS)

Additional deductions are available under NPS contributions:

• Section 80CCD(1): Up to ₹1.5 lakh (part of 80C limit).
• Section 80CCD(1B): Extra ₹50,000 beyond 80C limit.
• Section 80CCD(2): Employer's 10% salary contribution deductible.

6. Section 80D - Health Insurance Premium

Available deductions:

• Self, spouse, children: Up to ₹25,000
• Parents (under 60): Extra ₹25,000
• Parents (above 60): Extra ₹50,000
• Preventive health checkups: Up to ₹5,000

7. Interest on Home Loans: Sections 24(b), 80EE, 80EEA

Tax benefits on home loans:

• Section 24(b): Deduction up to ₹2 lakh annually.
• Section 80EE: Extra ₹50,000 for first-time homebuyers.
• Section 80EEA: Extra ₹1.5 lakh for affordable home buyers.

8. Section 80E - Education Loan Interest

Deduction on interest paid on student loans for 8 years.

9. Section 80G - Donations to Charitable Organizations

Deductions of 50% or 100% on eligible donations.

10. Sections 80TTA & 80TTB - Savings Account Interest

• 80TTA: Deduction up to ₹10,000 for those under 60.
• 80TTB: Senior citizens can claim up to ₹50,000.

11. Sections 80DD & 80U - Disability-Related Deductions

Tax relief for individuals with disabilities:

• Section 80DD: ₹75,000 to ₹1.25 lakh for dependents.
• Section 80U: ₹75,000 to ₹1.25 lakh for self-disability.

Conclusion

Salaried people can maximize their tax savings and reduce their taxable income by utilizing these deductions. It is essential to plan investments wisely and file Income Tax Returns (ITR) on time.

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