5 Ways Salaried Employees Can Save Tax in FY 2024-25
- PRITI SIRDESHMUKH
- Sep 24
- 8 min read
Updated: Sep 29
Filing income tax efficiently is essential for salaried employees looking to maximize savings while remaining compliant. For the Financial Year 2024-25, understanding the available deductions, exemptions, and tax-saving opportunities under both the old and new tax regimes can significantly reduce taxable income. With structured planning and careful documentation, employees can ensure that they claim all eligible benefits, avoid errors in filing, and secure faster refunds.
Lets explain key strategies for salaried individuals to save tax in FY 2024-25, covering deductions under Sections 80C, 80D, HRA exemptions, NPS contributions, and interest on home loans, while highlighting practical tips for choosing the right tax regime. Additionally, it introduces how tools like TaxBuddy simplify tax filing, ensure accuracy, and help employees track deductions effectively.
Table of Contents
How Salaried Employees Can Save Tax in FY 2024-25
Salaried individuals have several opportunities to optimize their tax liability in the Financial Year 2024-25 by strategically using available exemptions, deductions, and investment options. Effective tax planning starts with a clear understanding of the salary structure, including components such as basic salary, house rent allowance (HRA), conveyance, medical allowances, and special allowances. Each component can have a different tax treatment, and understanding these nuances allows employees to maximize benefits. Beyond salary structure, analyzing applicable provisions under the Income Tax Act is essential. Key sections like 80C, 80D, and 80CCD offer tax deductions on various investments, insurance premiums, and retirement contributions. Exemptions such as HRA, leave travel allowance (LTA), and interest on home loans further reduce taxable income. Choosing between the old and new tax regimes is an important decision since the old regime allows most deductions and exemptions, while the new regime offers lower tax rates but restricts exemptions. Filing returns accurately and on time using a reliable platform like TaxBuddy ensures that all deductions are correctly claimed, minimizing errors and facilitating a smooth tax filing experience.
Maximize Section 80C Deductions
Maximizing deductions under Section 80C is one of the most effective ways for salaried employees to save tax. Section 80C allows individuals to claim deductions up to ₹1,50,000 on specific investments and payments, which significantly lowers taxable income. Eligible instruments under this section include life insurance premiums, contributions to the Employee Provident Fund (EPF), Public Provident Fund (PPF), Equity-Linked Savings Schemes (ELSS), National Savings Certificate (NSC), and principal repayment on home loans. Careful planning throughout the financial year ensures that employees fully utilize the ₹1,50,000 limit. Tracking contributions regularly avoids situations where the limit is either underutilized or exceeded, which could lead to missed tax-saving opportunities. Platforms like TaxBuddy simplify this process by providing guided interfaces that automatically track eligible contributions and investments. This reduces the chances of errors or missed claims and ensures a seamless and accurate approach to claiming Section 80C deductions.
In addition to 80C, employees should also explore deductions under Section 80D for health insurance premiums, Section 80CCD for contributions to the National Pension Scheme (NPS), and Section 24 for home loan interest. Combining these deductions with exemptions like HRA and LTA allows for a comprehensive tax-saving strategy. By planning early, maintaining proper documentation, and filing returns through a reliable platform like TaxBuddy, salaried employees can effectively manage their tax liability, ensure compliance, and enjoy a smooth, error-free filing experience.
Claim House Rent Allowance (HRA) and Other Salary Exemptions
House Rent Allowance (HRA) is a key exemption for employees living in rented accommodation. The exempt portion is calculated based on actual rent paid, salary, and city of residence. Other salary exemptions include conveyance allowance, leave travel allowance (LTA), and certain reimbursements. Correct documentation, such as rent receipts, is essential to claim these exemptions. Employees filing under the old tax regime can maximize these benefits, while platforms like TaxBuddy help automate calculations and ensure all eligible exemptions are captured without errors.
Is HRA Allowed in the New Tax Regime?
Under the new tax regime, certain exemptions and deductions that were previously available are no longer allowed, including the House Rent Allowance (HRA). This means that taxpayers opting for the new regime cannot reduce their taxable income by claiming HRA, even if they pay substantial rent or live in high-cost cities. Instead, the new tax regime offers lower tax slab rates, which may benefit those with relatively simple income structures and minimal deductions. However, for employees who receive a significant portion of their salary as HRA, or who have substantial home loan interest payments, choosing the old tax regime may be more advantageous. Evaluating one’s total income, eligible deductions, and potential tax savings under both regimes is essential before filing, as it can significantly impact the final tax liability. Platforms like TaxBuddy help taxpayers compare scenarios under both regimes, ensuring informed decisions when choosing the appropriate filing method.
Make Use of Section 80D – Health Insurance Premium
Section 80D allows individuals to claim deductions for premiums paid towards health insurance covering themselves, their spouse, children, and parents. The maximum deduction ranges between ₹25,000 and ₹50,000, depending on the age of the insured members, with higher limits for senior citizens. Additionally, preventive health check-ups are also covered under Section 80D, allowing taxpayers to claim up to ₹5,000 for such expenses. Properly reporting health insurance premiums and preventive health costs helps reduce taxable income and increases overall tax savings. TaxBuddy provides a structured and user-friendly interface to enter all relevant health insurance details accurately, ensuring that no deduction is missed and that calculations are error-free. This makes it easier for taxpayers to optimize deductions under Section 80D while filing their returns efficiently.
Utilize NPS Contributions Under Section 80CCD(1B) and (2)
Contributions to the National Pension System (NPS) offer additional tax-saving opportunities. Under Section 80CCD(1B), employees can claim an extra ₹50,000 deduction over the 80C limit. Employer contributions to NPS fall under Section 80CCD(2) and are exempt up to 10% of salary. These contributions not only reduce taxable income but also help build long-term retirement savings. Platforms like TaxBuddy allow automated tracking of NPS investments, ensuring deductions are applied accurately.
Interest on Home Loan – Section 24(b) and Other Deductions
Salaried individuals can claim deductions on home loan interest under Section 24(b) up to ₹2,00,000 per year for a self-occupied property. Additional deductions are available for interest paid on loans for rented or let-out properties. Combined with principal repayment under Section 80C, these deductions can significantly reduce taxable income. Using a tax filing platform like TaxBuddy helps calculate the maximum allowable deduction while ensuring compliance with documentation requirements.
Choosing Between the Old vs New Tax Regime
Choosing between the old and new tax regimes is one of the most important decisions a salaried employee has to make during tax planning. The old tax regime provides the benefit of claiming multiple deductions and exemptions under various sections of the Income Tax Act, such as Section 80C for investments, Section 80D for health insurance premiums, HRA exemptions, and home loan interest deductions under Section 24. For employees with significant investments or eligible expenses, these deductions can substantially reduce taxable income, making the old regime advantageous. On the other hand, the new tax regime offers lower tax rates but removes most deductions and exemptions. This regime is often preferred by individuals with fewer eligible deductions or those who want a simpler tax structure without managing multiple claims. Choosing the right regime requires a careful comparison of potential tax savings, taking into account income, investments, and eligible exemptions. TaxBuddy provides intuitive comparative tools that allow employees to analyze both regimes efficiently, helping them select the option that maximizes their tax savings while remaining compliant.
How TaxBuddy Can Help Simplify Tax Saving
TaxBuddy simplifies the process of tax saving by offering AI-driven tools that guide salaried employees through every step of filing their returns. Users can easily input salary components, investment details, and eligible expenses, while the system automatically calculates exemptions and deductions to optimize tax savings. The platform ensures accurate computation, reducing the risk of errors and omissions that could trigger notices or delays in refunds. Additionally, TaxBuddy adheres to all filing deadlines, allowing employees to complete their returns on time and claim refunds faster. For individuals who prefer expert guidance, TaxBuddy also offers expert-assisted plans, where qualified tax professionals review the returns, ensure accuracy, and provide personalized advice on maximizing tax benefits. Overall, TaxBuddy makes tax saving a streamlined, reliable, and fully compliant process, ensuring employees can optimize their financial planning without unnecessary complexity or stress.
Conclusion
Maximizing tax savings for salaried employees in FY 2024-25 requires careful planning, proper documentation, and awareness of eligible deductions and exemptions. Tools like TaxBuddy simplify this process by providing automated guidance, accurate calculations, and expert support. For anyone looking to save tax efficiently and file their returns without errors, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy provides flexible options to suit different taxpayer needs. You can choose self-filing, where you prepare and submit your ITR yourself using an intuitive, guided interface, or expert-assisted filing, where a qualified tax professional reviews your details and ensures accurate submission. Both options are secure, easy to follow, and designed to minimize errors.
Q2. Which is the best site to file ITR?
While multiple platforms exist, TaxBuddy stands out as a reliable choice for both beginners and experienced taxpayers. Its AI-driven tools simplify tax calculations, auto-populate details from Form 16 and TDS statements, and provide step-by-step guidance, ensuring an accurate and timely filing experience.
Q3. Where to file an income tax return?
Income Tax Returns for FY 2024-25 can be filed online through the Income Tax Department e-filing portal or secure platforms like TaxBuddy. Filing online is faster, safer, and allows instant acknowledgment, refund tracking, and verification of your return.
Q4. Can HRA be claimed under the new tax regime?
Under the new tax regime, most exemptions including HRA are not available. Taxpayers can, however, claim HRA benefits only if they opt for the old tax regime, which allows deductions based on rent paid, salary structure, and location of residence.
Q5. What is the maximum deduction under Section 80C?
Under Section 80C, taxpayers can claim a maximum deduction of ₹1.5 lakh per financial year. Eligible investments and expenses include PPF contributions, life insurance premiums, ELSS funds, home loan principal repayments, and tuition fees for children.
Q6. How much deduction is allowed for health insurance premiums under Section 80D?
Section 80D allows deduction for premiums paid towards health insurance: up to ₹25,000 for self, spouse, and children, and an additional ₹25,000 for parents. For senior citizen parents, the limit increases to ₹50,000. This deduction helps reduce taxable income while covering healthcare costs.
Q7. Are NPS contributions eligible for additional tax deductions?
Yes, contributions to the National Pension Scheme (NPS) are eligible for an additional deduction of ₹50,000 under Section 80CCD(1B), over and above the ₹1.5 lakh limit of Section 80C. This makes NPS a valuable tool for retirement planning and tax savings.
Q8. How can home loan interest deductions be claimed under Section 24(b)?
Interest paid on home loans is deductible under Section 24(b) up to ₹2 lakh for self-occupied property. For let-out or rented properties, the entire interest paid is eligible. Taxpayers need to provide loan certificates from banks or financial institutions while filing the ITR to claim this benefit.
Q9. Is it beneficial to choose the old or new tax regime for tax savings?
The choice depends on your income sources, exemptions, and deductions. The old tax regime allows HRA, Section 80C, 80D, and other deductions, while the new tax regime offers lower tax slabs but fewer exemptions. Calculating the net tax liability under both regimes is essential to choose the optimal option.
Q10. Can TaxBuddy help calculate the optimal tax-saving strategy?
Yes, TaxBuddy offers AI-driven tools that automatically evaluate your income, deductions, exemptions, and investment options to suggest the best tax-saving approach. Whether under the old or new regime, it helps maximize savings while ensuring compliance.
Q11. How to ensure all salary exemptions and deductions are accurately claimed?
Accurate claim of exemptions like HRA, standard deduction, and allowances requires careful review of salary slips, Form 16, and investment proofs. TaxBuddy automatically fetches relevant details and cross-verifies deductions, reducing the risk of missing out on eligible benefits.
Q12. What documents are needed to file ITR correctly for FY 2024-25?
Key documents include Form 16, Form 26AS, bank statements, investment proofs under Sections 80C/80D, home loan statements, rent receipts (for HRA), and any TDS certificates. Having these ready ensures correct reporting, faster refunds, and smooth e-filing. TaxBuddy allows easy uploading and organization of these documents for accurate ITR submission.
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