How to Save Tax in India

New vs old regime—how to choose?

The new regime provides lower slab rates with simplified compliance but fewer deductions. The old regime allows popular deductions under 80C, 80D, HRA, home loan interest and more. Compare both annually using realistic projections of your investments and benefits rather than theoretical maxima. If you naturally invest less in tax-saving instruments or have simple salary structures, new regime may be better; if you use housing, insurance and NPS aggressively, the old regime can win.

Is Section 87A rebate applicable to me?

Section 87A provides a rebate up to the specified threshold when taxable income (after deductions and exemptions under the chosen regime) falls within the limit. In the new regime, enhanced relief applies under certain conditions. Always compute correctly: include cess, exclude exempt allowances, and confirm the latest thresholds before filing. Our Income Tax Calculator helps estimate liability under both regimes.

What counts under Section 80C?

Eligible investments include EPF contributions, PPF, ELSS mutual funds, life insurance premiums, principal repayment on home loans, and certain tuition fees. The overall limit is shared across instruments. Don’t rush in March—plan monthly so cash flow remains comfortable and returns align with goals. ELSS offers market-linked returns and a three-year lock-in, making it useful for long-term wealth creation alongside tax savings.

How does 80D health insurance deduction work?

Premiums for health insurance for self, spouse, children and parents qualify with different limits for senior citizens. Preventive health check-ups have a sub-limit. Choose adequate coverage first; tax benefit is a bonus. Keep digital receipts and policy documents organized for proof submission. Consider top-up policies to enhance coverage efficiently.

HRA vs home loan interest—what’s better?

HRA benefits depend on rent, city type and basic salary. Home loan interest (Section 24) applies to self-occupied or let-out property with different caps. Choose based on your living situation and financial goals rather than tax alone. Home ownership adds maintenance and opportunity costs; renting offers flexibility. If you own, maintain records like possession certificates and interest certificates for claims.

Capital gains—what should I watch?

Equity gains have different tax treatment for short and long-term holding periods; debt and real estate have their own rules. Indexation benefits and grandfathering may apply historically—check current policies. Plan redemptions around holding thresholds and avoid frequent churn. Keep contract notes and statements for accurate computation at filing time.

Can NPS help reduce tax?

Beyond 80C, NPS provides an additional deduction under 80CCD(1B) for voluntary contributions up to the specified limit. It’s a long-term retirement vehicle with tiered options and lock-in features. Assess your liquidity needs before committing. For salaried, employer contributions may also qualify under separate provisions, improving efficiency.

What documentation should I maintain?

Maintain digital copies of investment proofs, premium receipts, rent agreements and landlord PAN where applicable, home loan interest certificates, and donation receipts. Organize monthly to avoid March stress. Many employers require proof submission earlier than the tax filing deadline—keep calendar reminders.

Can I pay rent to parents and claim HRA?

Yes, provided a proper rent agreement exists, rent is paid via traceable channels, and landlord PAN is furnished if required. The arrangement must be genuine; tax authorities can seek evidence. Evaluate overall tax impact for both sides before setting up the arrangement.

What’s an easy yearly tax planning routine?

At the start of the year, select regime based on expected deductions and investments. Set SIPs for ELSS or other planned instruments. Buy or renew health insurance well before renewal dates. Update rent and HRA details in payroll portals. Quarterly, review progress and adjust. Before filing, reconcile statements, ensure proofs match claims, and keep acknowledgement copies safely for records.