Helpful Ways To Save Income Tax
Some of the most effective income tax saving options that help you save up on taxes in the Income tax slab for AY 2025-26 are mentioned below in detailed points.
- Invest Under Section 80C Deduction
The Income Tax Act permits an 80C deduction up to Rs. 1.5 lakh for investments/payments made towards approved instruments like PPF, NSC, life insurance premiums, NPS, home loan repayment, etc. Ensuring to fully use the Rs. 1.5 lakh ceiling by consistently investing can lower taxable income.
- Claim Home Loan Interest Deduction
Under Section 24 of the tax slab 2025, an additional deduction of up to Rs. 2 lakh is available on the interest paid on a home loan taken for a self-occupied property. The combined advantage of Rs. 3.5 lakh per year under Sections 80C and 24 can significantly reduce taxes.
Equity-linked savings Schemes offer tax deductions under Section 80C while potentially providing returns through equity markets in the long run, which one can calculate using the Income tax calculator. The lock-in period is only three years.
Apart from the Rs. 1.5 lakh deduction under Section 80C, an additional deduction of up to Rs. 50,000 can be claimed for contributions made to the National Pension Scheme under Section 80CCD(1B).
- Claim Medical Insurance Premium Deduction
Deduction of up to Rs. 25,000 is available for paying own and family's medical insurance premium under Section 80D of the tax slab 2025. An extra Rs. 25,000 deduction for senior citizens' parents.
- Claim Interest from Savings Account
Interest income of up to Rs. 10,000 from a savings bank account is tax-exempt in a year under Section 80TTA. Senior citizens can claim an exemption of up to Rs. 50,000 under Section 80TTB. One should use the Income tax calculator ay 2025-26 for accurate numbers.
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- Claim LTCG Exemption on Shares/MFs
Long-term capital gains (LTCG) up to Rs. 1 lakh arising from equity shares and mutual funds are exempt from tax if held for over one year.
- Claim Housing Rent Deduction
Under Section 80GG, a deduction of up to Rs. 60,000 per year can be claimed for rent paid by taxpayers staying on rent.
- Claim Donation Deductions
Deductions up to 50%/100% of the donation amount are available under Section 80G on donations made to approved charitable institutions, calculated using the Income tax calculator AY 2025-26.
- Claim Interest Income Deduction
Interest earned from the Post Office Savings Account is fully tax-exempt under Section 10(15)(i).
- Claim Health Check-up Exemption
Preventive health check-up expenses of up to Rs. 5,000 qualify for a deduction from total income under Section 80D.
- Refresh Parents' Health Cover
Deduct premium paid towards preventive health checkups of elderly parents up to Rs. 50,000 under Section 80D.
- Claim Education Loan Interest Exemption
A full deduction is available on interest paid on loans taken for your or a family member's higher education under Section 80E.
- Claim Life Insurance Exemption
The sum received on maturity or claim settlement of life insurance policies is fully tax-exempt in India under Section 10(10D). One should use the income tax calculator for accurate numbers.
- Adjust Additional Tax Paid via TDS
Opt for Tax Deduction at Source from income sources for delayed tax payment. Extra tax withheld can be adjusted against the final tax liability at year-end and calculated using the new tax regime calculator.
Working professionals living on rent can claim an exemption for House Rent Allowance received as part of their CTC to reduce tax liability under Section 10(13A).
- Review Long-Term Capital Assets
Check if any existing long-term investments made 3+ years ago now qualify as long-term capital assets for indexation benefit and lower long-term capital gains tax.
- Monitor TDS and Rectify Errors
Track TDS certificates received from employers/banks and rectify any mismatch using the new tax regime calculator before filing returns. Claim unaccounted TDS as a refund.
- Exempt Agriculture Income
Income arising from agriculture and animal husbandry is fully exempt from tax in India under Section 10(1).
- Stay Below Income Threshold
Individuals/HUF with total taxable income up to Rs. 2.5 lakh pay no tax as per the new tax regime.
- Plan Investments in Advance
Carefully evaluate all deduction limits and plan tax-saving investments between April and March to maximise deductions and lower tax outgo.
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- File Returns Through E-Filing
Income Tax e-filing is mandatory if taxable income exceeds Rs. 2.5 lakhs or as prescribed. File returns via the Income Tax portal before the due date to avoid penalties. The Income Tax Department also processes e-filed returns quickly.
