Tax Planning Basics for Salaried Employees

Most salaried professionals view taxes as a financial burden. But with the right planning, taxes can become a tool for wealth preservation and goal optimization. This blog will help you understand essential tax-saving strategies tailored for salaried individuals.

Understand Your Tax Slab

Tax liability depends on your income bracket under either the old regime (with exemptions and deductions) or the new regime (with lower tax rates but no exemptions). Choose the regime that works best for you annually.

Income (₹)	Old Regime (with deductions)	New Regime (without deductions)
Up to 2.5 lakh	Nil	Nil
2.5–5 lakh	5%	5%
5–10 lakh	20%	10–15%
10 lakh+	30%	20–30%

Use a tax calculator to compare which regime suits your salary structure.

Smart Ways to Save Tax

1. Claim Standard Deductions A flat ₹50,000 deduction is available for all salaried employees under the old regime.

2. Maximize Section 80C You can claim up to ₹1.5 lakh through options like:

EPF (Employee Provident Fund)
PPF (Public Provident Fund)
ELSS mutual funds
Life insurance premiums
Principal repayment on a home loan

3. Use Section 80D for Health Insurance

Up to ₹25,000 for self/family
Additional ₹25,000–₹50,000 for parents (depending on their age)

4. House Rent Allowance (HRA) If you live in a rented house, HRA can be partially or fully tax-exempt depending on rent paid and your city of residence.

5. Claim Interest on Home Loan (Section 24b) Interest up to ₹2 lakh/year is deductible for self-occupied homes.

Simple Tips for Better Planning

Submit investment proofs on time to your HR department to avoid higher TDS.
Use salary restructuring to include tax-saving allowances like food coupons, NPS contribution, LTA, etc.
Keep documentation of all exemptions/deductions you claim in case of scrutiny.

Conclusion

Tax planning is not about evasion—it's about using the law to your benefit. Start early in the financial year, choose the right regime, and use available deductions wisely to increase take-home pay and fuel your investment goals.