Tax-saving Options - Best Ways to Save Taxes in India

Saving on taxes is a smart way to keep more of your hard-earned money. Explore the different deductions, exemptions, and tax-saving investment options available to reduce your taxable income. Certain tax-saving strategies include utilising deductions specified under Section 80C of the Income Tax Act, 1961. Alternatively, you could benefit from the exemptions provided on home loans and medical expenses.

Tax-saving Options in India

There are various tax-saving schemes that you can consider, such as ELSS, life insurance, NPS, PPF, etc. Find out how to save tax in India with the help of the following avenues:

Investment Option	Details	Tax Benefits and Deductions
Equity-linked Savings Scheme (ELSS)	Open-ended mutual fund with a high equity allocation Offers high returns based on market performance	Deductions of up to ₹1.5 Lakhs per financial year under Section 80C of the Income Tax Act, 1961
Public Provident Fund (PPF)	Provides tax-saving benefits Government-backed scheme with guaranteed returns	Deductions of up to ₹1.5 Lakhs per year u/s 80C
Tax-saver Fixed Deposit (FD)	Mandatory lock-in period of 5 years Offered by only banks	Deductions of ₹1.5 Lakhs every financial year under Section 80C
Life Insurance Policies	Provides financial protection by paying out a lump sum upon the demise of the policyholder Get financial security for your loved ones in exchange for paid premiums	Premiums paid qualify for a deduction up to ₹1.5 Lakhs under Section 80C Income on maturity is tax-free if the premium is not more than 10% of the sum assured under Section 10(10D)
National Pension Scheme (NPS)	Government-backed retirement savings scheme Get market-linked returns and tax benefits for contributions to the pension scheme	Deductions of up to 10% within ₹1.5 Lakhs under Section 80 CCE Additional deduction of up to ₹50,000 under Section 80 CCD(1B) applicable only for Tier I accounts

Tax-saving Options in New vs Old Tax Regime

Tax Deductions Available Under the Old and New Tax Regime

Some tax-saving options for salaried individuals include House Rent Allowance (HRA) and Leave Travel Allowance (LTA). You can benefit from them, along with deductions.

New Tax Regime

Deduction	Applicability
Employer contribution to NPS u/s 80CCD(2)	Central government employee: Deduction of up to 14% of your employer’s salary (Basic + DA) Non-government employee: Up to 10% of salary (Basic + DA)
Transport and conveyance allowance	Exemption allowed to the extent of ₹3,200 per month
Interest on home loan u/s 24	Deduction applicable if it is a let out property
Leave Travel Allowance	Not applicable
House Rent Allowance u/s 10(13A)	Excluded

Old Tax Regime

Deduction	Applicability
HRA	Applicable
LTA	Included
Interest on home loan u/s 24b on vacant or self-occupied property	Included
Employee’s contribution to NPS	Applicable
Daily and conveyance allowance	Included

Which tax saving scheme is best?

The best tax-saving scheme depends on your financial goals. Popular options include Public Provident Fund (PPF), Equity-Linked Savings Scheme (ELSS), National Pension System (NPS), and Fixed Deposits (FDs).

Does investing through SIP save tax?

Yes, you can save tax by investing in a SIP under Equity Linked Savings Schemes (ELSS). ELSS investments are eligible for tax deductions of up to ₹1.5 lakh per financial year under Section 80C of the Income Tax Act, 1961.

How can I save tax smartly?

Save tax smartly by investing in ELSS, PPF, and NPS. Claim deductions under Sections 80C and 80D, opt for home loan interest deductions, and utilize HRA exemptions if renting.

How can I avoid tax on my salary?

Avoid tax on salary by investing under Section 80C in PPF, EPF, and ELSS. Use deductions for HRA, LTA, and health insurance, and consider the new tax regime if it’s beneficial.

How can I save tax on my annual salary of ₹9 Lakhs?

Learning how to save tax on ₹9 Lakhs salary does require proper planning. First, you must assess your risk appetite and investment preferences and choose the suitable investment option. These include ULIP, FDs, PPF, NPS, NSC, mutual funds, etc. Based on your contributions, you can then enjoy deductions on your taxes.

How can I increase my tax savings?

The first step to learning how to save income tax is to understand and try to get tax deductions. You can claim deductions and exemptions such as House Rent Allowance (HRA) and Leave Travel Allowance (LTA), along with the deductions under various sections of the Income Tax Act.