A salaried Indian earning ₹10 lakh/year can legally reduce their tax to near zero with the right planning. Here's how.

New Regime vs Old Regime

The new tax regime (default from FY 2023-24) has lower slab rates but no deductions. The old regime allows you to claim 80C, HRA, home loan interest, and more.

Rule of thumb: If your total deductions exceed ₹3.75 lakh, the old regime saves more tax.

10 Ways to Save Tax

1. Section 80C — ₹1.5 Lakh Deduction

Invest in PPF, ELSS, EPF, NSC, 5-year FD, or pay life insurance premium. The most popular deduction.

2. NPS — Additional ₹50,000 (Section 80CCD(1B))

National Pension Scheme allows an extra ₹50,000 over and above the ₹1.5L 80C limit. Tax saving: ₹15,600 for 30% bracket.

3. HRA Exemption

If you pay rent, claim HRA exemption. The exempt amount is the minimum of: actual HRA received, rent paid − 10% of basic, or 50%/40% of basic salary (metro/non-metro). Use our HRA Calculator (coming soon).

4. Home Loan Interest — Section 24(b)

Claim up to ₹2 lakh deduction on home loan interest per year for a self-occupied property. On a ₹50L loan, you're paying ~₹4L in interest in the first year — claim up to ₹2L.

5. Home Loan Principal — Section 80C

Home loan principal repayment is included in the ₹1.5L 80C limit.

6. Health Insurance — Section 80D

• ₹25,000 for self/spouse/children
• ₹25,000 additional for parents (₹50,000 if parents are senior citizens)
• Max deduction: ₹75,000

7. Education Loan Interest — Section 80E

100% deduction on interest paid on education loan (no cap) for up to 8 years. No limit on loan amount.

8. Standard Deduction

₹50,000 standard deduction available to all salaried employees in the old regime (automatically applied).

9. LTA — Leave Travel Allowance

Two tax-free trips within India (per 4-year block) for yourself and family. Keep all travel bills.

10. Gratuity & PF

Gratuity up to ₹20 lakh is fully exempt. EPF corpus and interest are tax-free on maturity (after 5 years of service).

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Quick Calculation

For a ₹12L salary (old regime):

• Gross income: ₹12,00,000
• Less: Standard deduction: −₹50,000
• Less: 80C (PPF + LIC): −₹1,50,000
• Less: NPS 80CCD(1B): −₹50,000
• Less: 80D (health insurance): −₹25,000
• Taxable income: ₹9,25,000 → Tax: ~₹1,07,500

Without planning: tax on ₹12L = ~₹1,87,500. Saving: ₹80,000/year.