How to Save Tax in India: 15 Best Ways for FY 2025-26
Want to reduce your tax liability legally? This comprehensive guide covers 15 proven tax-saving strategies for FY 2025-26. Learn how to maximize deductions, claim exemptions, and save thousands of rupees on your income tax.
💰 Potential Savings:
By implementing these strategies, you can save up to ₹50,000+ annually in taxes. Start planning early to maximize your benefits!
Top 15 Tax-Saving Strategies
1. Section 80C - The ₹1.5 Lakh Saver
Maximum Deduction: ₹1,50,000 per year
Section 80C is the most popular tax-saving provision. You can claim up to ₹1.5 lakh by investing in:
- ELSS Mutual Funds: Tax saving + market returns, 3-year lock-in
- PPF: Safe, government-backed, 15-year tenure, 7.1% interest
- EPF: Employer contribution, retirement corpus
- Life Insurance Premiums: Term + whole life policies
- NSC: National Savings Certificate, 5-year tenure
- Tax Saver FD: Bank fixed deposits, 5-year lock-in
- Home Loan Principal: EMI principal component
- Tuition Fees: For up to 2 children
💡 Pro Tip:
Start SIP in ELSS from April to spread investments throughout the year. Don't wait until March!
2. Section 80D - Health Insurance Deduction
Maximum Deduction: Up to ₹1,00,000 per year
- ₹25,000 for self, spouse, and children (below 60 years)
- ₹50,000 if self/spouse is above 60 years
- Additional ₹25,000 for parents (below 60 years)
- Additional ₹50,000 for parents (above 60 years)
- ₹5,000 extra for preventive health checkups
💡 Smart Move:
Cover your parents to claim up to ₹1 lakh total. Health insurance + tax benefit = win-win!
3. NPS - Additional ₹50,000 Deduction
Maximum Deduction: ₹50,000 (over and above 80C limit)
Section 80CCD(1B) allows additional ₹50,000 deduction for National Pension System contributions. This is separate from the ₹1.5 lakh limit under 80C.
⚡ Total Possible:
80C (₹1.5L) + NPS (₹50K) = ₹2 lakh in deductions!
4. HRA - House Rent Allowance Exemption
If you live in a rented house, claim HRA exemption. The exemption is the minimum of:
- Actual HRA received from employer
- 50% of salary (metro) or 40% (non-metro)
- Rent paid minus 10% of salary
Example: If you pay ₹20,000/month rent in Mumbai with ₹60,000 monthly salary, you can save ₹60,000+ annually!
5. Home Loan Interest - Section 24(b)
Maximum Deduction: ₹2,00,000 per year
Claim deduction on home loan interest under Section 24(b). This is separate from the principal repayment deduction under 80C.
🏠 Note:
Only available under old tax regime. Not applicable if you choose new regime.
6. Standard Deduction for Salaried
Deduction: ₹75,000 (New Regime) | ₹50,000 (Old Regime)
Automatic deduction for all salaried individuals. No documentation required. It's already applied when calculating taxable income.
7. Education Loan Interest - Section 80E
Maximum Deduction: No upper limit
Full interest paid on education loan for higher studies is deductible. Available for 8 years or until loan is repaid, whichever is earlier.
8. Donations - Section 80G
Deduction: 50-100% of donation amount
Donations to approved charitable institutions qualify for tax deductions. Check if the organization is registered under 80G.
9. Disability Deduction - Section 80U/80DD
Maximum Deduction: ₹75,000 (₹1.25 lakh for severe disability)
Available for individuals with disabilities or those supporting dependents with disabilities.
10. Savings Account Interest - Section 80TTA
Maximum Deduction: ₹10,000 per year
Interest earned on savings accounts up to ₹10,000 is tax-free under Section 80TTA. For senior citizens, use Section 80TTB with ₹50,000 limit.
11. First-Time Home Buyer - Section 80EE/80EEA
Maximum Deduction: ₹50,000 additional (beyond 24b limit)
Additional deduction for first-time home buyers. Property value should not exceed ₹45 lakh, and loan should be below ₹35 lakh.
12. Leave Travel Allowance (LTA)
LTA received from employer for domestic travel is tax-free. Claim for 2 journeys in a block of 4 years (current block: 2022-2025).
📝 Requirements:
Keep travel bills (flight/train tickets). Only travel fare is exempt, not hotel/food expenses.
13. Electric Vehicle Loan - Section 80EEB
Maximum Deduction: ₹1,50,000 on loan interest
Interest on loan taken for purchasing an electric vehicle is deductible up to ₹1.5 lakh. Available until March 31, 2026.
14. Meal Coupons & Other Allowances
Tax-Free Benefits:
- Meal coupons: ₹50/day (₹13,000/year)
- Telephone/Internet reimbursement
- Uniform allowance
- Books & periodicals
- Children education allowance: ₹100/child/month
15. Choose the Right Tax Regime
The most important decision! Compare old vs new regime every year:
- New Regime: Better if deductions below ₹1.5 lakh
- Old Regime: Better if deductions above ₹2 lakh
🎯 Critical:
Salaried employees can switch regimes every year. Reassess annually to maximize savings!
Tax Planning Timeline
Calculate Your Maximum Tax Savings
Use our free tax calculator to see exactly how much you can save with these strategies.
Quick Action Checklist
- ☑Start ELSS SIP for ₹12,500/month (₹1.5L/year)
- ☑Buy/renew health insurance for self and parents
- ☑Open NPS account and contribute ₹50,000/year
- ☑Collect rent receipts if claiming HRA
- ☑Track home loan principal and interest payments
- ☑Compare tax regimes using calculator
- ☑Submit investment proofs to employer before deadline
Disclaimer: Tax-saving strategies are for informational purposes based on FY 2025-26 rules. Investment decisions should be made after consulting with qualified financial and tax advisors.