Tax-Saving Schemes for Salaried Employees: Your Guide to a Smart Move for FY 2025–26
Are you a salaried employee and worried about the tax planning in FY 2025-26? Now is the right time to review deductions, learn more tax-saving options, and plan your investments accordingly.
The 2025 Indian Budget made middle-income earners free from tax under a new regime. Now, you can enjoy a tax relief of up to 60,000 rupees for income up to 12 lakh rupees.
Additionally, the Finance Act 2025 came up with the increment in the tax-free advantages for salary-based individuals. These schemes are focused to ease the overall claim process.
Section 80C: Key Tax-Saving Options up to ₹1.5 Lakh
This section allows the claim up to rupees 1.5 lakh in yearly deductions, if you’ve investments in PPF, NSC, ELSS, EPF, Mutual funds, Life Insurance, tuition fees, home loan repayment, or Sukanya Samriddhi Yojana.
ELSS Mutual Funds for Better Options
ELSS funds come with the shortest lock-in period of 3 years under Section 80C, offering the most seamless and flexible way to save tax.
While FD returns are fixed, ELSS funds are for long-term gains, depending on the market performance.
National Pension System (NPS)
The National Pension System (NPS) lets you claim an additional rupee 50,000 deduction under Section 80CCD(1B), available only in the old tax regime.
If you’re a salaried employee, NPS can be a great pension and tax-saving tool.
Health Insurance Tax Benefits
Under Section 80D, you can save taxes while safeguarding your family’s health –
- Up to rupees 25,000 for premiums paid for yourself, spouse, and children.
- An additional rupees 25,000 for parents (or rupees 50,000 if they are senior citizens).
In case you’ve not bought or renewed your health insurance, try to do it early and contribute to tax savings.
House Rent Allowance (HRA) Exemption
If your salary has an HRA (House Rent Allowance) component, there are certain tax relief options available on several parameters –
– Actual HRA amount in salary
– 50% of salary (for metro cities) and 40% of salary (for non-metro cities)
– Rent paid, excluding 10% of your salary.
Home Loan Benefits: Principal and Interest Deductions
If you have a home loan or are planning to buy a property, there are two tax benefits available –
- Principal repayment up to ₹1.5 lakh under Section 80C.
- Interest (up to ₹2 lakh per year) paid on home loans under Section 24(b)
Standard Deduction for Salaried Employees
Every employee with a salary can get an automatic deduction benefit of ₹75,000 from their total income for FY 2025-26.
Choosing Between Old and New Tax Regimes
While the old tax regime allowed multiple deductions such as 80C, 80D, HRA, and home loan interest, the new tax regime has less deductions. However, there is an ease in the lower slab rate for middle-income earners.
In simple words, if your deductions are high, go for the old regime. Otherwise, choosing the new tax regime could bring more simplicity and lower exemptions.
Conclusion
Hence, tax planning can be a lot easier and smarter if you’ve the necessary information. Act early and plan your investments to make the best use of offerings and claims. Compare both tax regimes based on your earnings, deductions, and investments, before selecting the right one for the tax season.
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This analysis is for informational purposes only. Please consult a SEBI-registered financial advisor before investing.
– Chandan Pathak
Equity Research Analyst, StockYaari