Income Tax: How to save money while filing an Income tax return?

Income tax is that portion of the money that is charged by the government of a country from its citizens. The government collects taxes from the citizens and uses them for the welfare of the citizens, the development, and the Security of the country. And it is mandatory for every citizen who is earning more than a specified limit set by the government.

How to save money while filing Income tax return?

In this blog we will discuss about how a salaried person can save money while filing Income tax return. And for that one should know how income tax works.

In case of salaried employee, The employer is liable to deduct the tax, if his salary is more than 2,50,000 then the employer will deduct the tax amount first from employee’s salary according to the tax slabs and then credit the balance to his account.

For example, If your salary is 7,00,000 per annum, the employer will deduct the (according to tax slab Rs 15,000 + 10% of total salary for income group of Rs. 6,00,000 to Rs. 900,000)

Under the new tax regime introduced in the Union Budget for the Financial Year 2020-21, individuals can choose between the old tax regime, which offers various exemptions and deductions, and the new tax regime with lower tax rates but without any exemptions and deductions.

A salaried employee earning 15 lakhs per annum in India can avail the highest tax exemption depending on the regime chosen.

Under the old income tax regime:


Deductions in income tax refer to specific expenses, investments, or contributions that are allowed to be subtracted from an individual’s total income. These deductions help reduce the taxable income, resulting in a lower tax liability. By claiming eligible deductions, individuals can effectively reduce the amount of income that is subject to tax.

Standard Deduction:

A fixed deduction of Rs. 50,000 can be claimed without providing any bills or receipts.

Deductions under Sections 80C, 80CCC, and 80CCD(1):

Contribution towards various tax-saving instruments can yield exemptions up to Rs. 1.5 lakhs.

National Pension System (NPS) under Section 80CCD(1B):

Additional Rs. 50,000 can be claimed by contributing to the NPS.

Home Loan:

Deduction under Section 80C for principal repayment up to Rs. 1.5 lakhs and under Section 24(b) for interest payments up to Rs. 2 lakhs.

Education Loan:

Interest paid on an education loan gets a tax deduction under Section 80E, without an upper limit.

Health Insurance Premium :

Deduction under Section 80D for insurance premiums paid for self, spouse, children, and parents, subject to age and amount limits.

House Rent Allowance (HRA), Leave Travel Allowance (LTA), and Conveyance Allowance:

Exemptions can be claimed against actual expenses and receipts.

Donations under Section 80G and medical expense deductions under Sections 80DD, 80DDB, and 80U can be claimed, subject to conditions and limits.

By utilizing these exemptions and deductions optimally, a salaried employee can significantly reduce their taxable income and tax liability. Proper documentation and planning, along with guidance from a tax professional, can help in maximizing these benefits.

A salaried employee needs to weigh the options under both the tax regimes to understand which one would be more beneficial based on their individual financial situation, investments, and expenses. It may be advisable to consult a tax expert or a financial advisor in choosing the most appropriate tax regime to minimize the tax liability while meeting financial goals.

Standard DeductionRs. 50,000
Deductions under Sections 80C, 80CCC, 80CCD(1)80C, 80CCC, 80CCD(1)Rs. 1.5 lakhs
National Pension System (NPS)80CCD(1B)Rs. 50,000
Home Loan80C, 24(b)Principal repayment: Rs. 1.5 lakhs; Interest payment: Rs. 2 lakhs
Education Loan80ENo upper limit
Health Insurance Premium80DSubject to age and amount limits
House Rent Allowance (HRA), LTA, Conveyance AllowanceExemptions can be claimed against actual expenses and receipts
Donations80GSubject to conditions and limits
Medical expense deductions80DD, 80DDB, 80USubject to conditions and limits

Investment in tax saving instruments: How to save tax by investing?

Under the new income tax regime:
The new tax regime provides lower tax slabs for various income ranges but does not provide any exemptions or deductions, except for the NPS contribution by the employer (Section 80CCD(2)) and the EPF contributions (Section 80C). Therefore, employees opting for the new tax regime cannot claim any of the exemptions and deductions provided under the old tax regime, which may result in a lower tax benefit.


Under section 80 C, a person can avail tax exemption of upto₹150000 lakh by investing into an ELSS mutual fund, Fixed deposit for a tenure of 5 years or more, Home Loan Repayments & Stamp Duty, SukanyaSmriddhiYojana (SSY), National Savings Certificate (NSC), premium paid towards life insurance policy of self, spouse, children, parents.
Under section 80CCC of the Income tax act, a person can claim exemption upto₹150000 lakh annually for investments made into PPF, EPF, and Life Insurance.
80CCD1 of the Income-tax Act, a person can also claim exemption upto₹150000 lakh annually for investments in the National Pension Scheme (NPS), Atal Pension Yojna(APY)

• Under section 80 DD of Income tax, tax deduction can be availed by the person for a dependent who is differently abled and utterly reliant on the person for support and maintenance. The deduction limit permitted is up to ₹75,000 in cases of disability up to 40%. For a person with a disability up to 80% or more, the tax filers can avail deduction up to ₹125000 per annum.

• Under Section 24 of the Income Tax Act , homeowner can claim a deduction of up to ₹200000 on their home loan interest if the owner or his family reside in the house property. The entire interest is waived off as a deduction when the house is on rent.

LIC maturity amount is fully tax-exempt under Section 10(10D) unless the premium exceeds 10% (20% in case of policies issued after April 1, 2003) of the sum assured.

• Under Section 80D of Income tax act a person can claim a deduction of total income for medical insurance premiums paid or top-up in health plans. A person below the age of 60 can avail tax exemption of ₹25000 and a person above 60 can avail ₹50000.

• Under section 80E of Income tax act a person can avail deduction on interest paid on an education loan. Deduction on interest can be availed for the period of max 8 years or when the loan tenure is over.

• Under the 80G of the Income tax act a person can claim a deduction while donating to a charitable trust. A person can claim a deduction from 50% to 100%, providing that the donation is made to eligible trusts and institutions.

ELSS Mutual Fund80CUp to ₹1,50,000
Fixed Deposit (5 years or more)80CUp to ₹1,50,000
Home Loan Repayments & Stamp Duty80CUp to ₹1,50,000
Sukanya Samriddhi Yojana (SSY)80CUp to ₹1,50,000
National Savings Certificate (NSC)80CUp to ₹1,50,000
Premium paid towards Life Insurance80CUp to ₹1,50,000
PPF, EPF, Life Insurance80CCCUp to ₹1,50,000
National Pension Scheme (NPS), Atal Pension Yojna (APY)80CCD(1)Up to ₹1,50,000
Deduction for Disabled Dependents80DDDisability up to 40%: Up to ₹75,000; Disability above 80%: Up to ₹1,25,000
Home Loan Interest24Up to ₹2,00,000
LIC Maturity Amount10(10D)Fully tax-exempt unless premium exceeds specified limits
Medical Insurance Premiums80DBelow 60 years: Up to ₹25,000; Above 60 years: Up to ₹50,000
Education Loan Interest80EDeduction for the interest paid on education loan
Donations to Charitable Trusts80GDeduction based on the percentage specified for eligible trusts and institutions


Financial Management: Meaning, Role, Objective, Importance.

Meaning Financial management refers to the managerial decisions concerned with the acquisition, allocation, and utilization of funds efficiently to achieve the organizational objective. Its main objective is to maximize the organization’s value through efficient financial resource management, stability in the financial situation, and growth. Organizations can manage risks, invest wisely,

Read More »
A Deep Dive into Zerodha’s Startup Journey

Zerodha is an Indian discount brokerage firm that was founded in 2010 by Nithin Kamath and his brother Nikhil Kamath. The company quickly gained popularity in the Indian stock market with its innovative technology-driven trading platforms and low brokerage fees. Today, Zerodha has over 6 million registered users and is

Read More »
India’s Top 100 Companies

India is home to some of the world’s biggest and most successful companies. From tech giants to pharmaceutical powerhouses, Indian companies are making their mark on the global stage. In this blog post, we’ll take a closer look at the top 100 companies in India and what makes them stand

Read More »
Basics of Personal Finance :- Mastering Your Money

Personal finance is the management of an individual’s financial resources, including income, expenses, savings, and investments. It is an essential aspect of everyday life, as it helps us achieve our financial goals and improve our overall financial wellbeing. In this blog, we will discuss the basics of personal finance and

Read More »
Essential Links
Why We?

The Commercial Brain is your one-stop solution for all your business and startup needs. From company registration to web development and digital marketing, we offer a comprehensive suite of services designed to help you build and grow your business.


Shopping cart


No products in the cart.

Continue Shopping


Click one of our contacts below to chat on WhatsApp