For most salaried individuals, salary income is the primary source of earnings. While paying taxes is mandatory, the Income Tax Act of India offers various deductions and exemptions that can help you reduce your taxable income and save money.

In this blog, we’ll explain the important deductions available to salaried employees, so you can plan your finances better and make the most of tax benefits.

1. Standard Deduction – ₹50,000

All salaried individuals are eligible for a flat deduction of ₹50,000 from their taxable income. This is available irrespective of actual expenses and helps reduce overall tax liability.

2. House Rent Allowance (HRA) – Section 10(13A)

If you live in a rented house, you can claim HRA exemption. The exemption amount is the lowest of the following:

• Actual HRA received from the employer

• 50% of salary (for metro cities) or 40% (for non-metro cities)

• Rent paid minus 10% of salary

3. Leave Travel Allowance (LTA) – Section 10(5)

Employees can claim exemption on expenses incurred on travel within India. Key points:

• Covers travel costs (not food or accommodation).

• Can be claimed twice in a block of four years.

4. Deductions under Section 80C – Up to ₹1,50,000

This is the most common tax-saving option. You can claim up to ₹1.5 lakh for investments and expenses such as:

• Life insurance premiums

• Employees’ Provident Fund (EPF)

• Public Provident Fund (PPF)

• National Savings Certificate (NSC)

• ELSS Mutual Funds

• Tuition fees of children

• Principal repayment of home loan

5. National Pension Scheme (NPS) – Section 80CCD(1B)

Apart from 80C, you can claim an additional deduction of ₹50,000 by investing in NPS. This is over and above the ₹1.5 lakh limit under 80C.

6. Health Insurance Premium – Section 80D

You can claim deductions for medical insurance premiums:

• ₹25,000 for self, spouse, and children (₹50,000 if senior citizen).

• Additional ₹25,000 for parents (₹50,000 if parents are senior citizens).

7. Interest on Home Loan – Section 24(b)

If you have taken a home loan, you can claim deduction on interest paid:

• Up to ₹2 lakh per year for self-occupied property.

• No limit for let-out property (subject to conditions).

8. Deduction for Education Loan – Section 80E

Interest paid on education loans can be claimed as a deduction for up to 8 years or until the loan is repaid (whichever is earlier).

9. Donations to Charitable Institutions – Section 80G

You can claim deductions for donations made to specified funds, trusts, and charitable institutions. The percentage (50% or 100%) depends on the organization.

10. Other Deductions

• 80TTA/80TTB – Deduction on savings account interest (₹10,000) and for senior citizens (₹50,000).

• 80GGC – Deduction for donations to political parties.

• Professional Tax – Deductible from salary.

Conclusion

By understanding and utilizing these salary income deductions, you can significantly lower your tax liability and increase your take-home pay. Effective tax planning is not just about saving money—it also helps you secure your future with investments and insurance.

If you want expert help in filing your Income Tax Return (ITR) and claiming maximum deductions, our team at GST2ITR can guide you with hassle-free services.

👉 Contact us today to maximize your tax savings!