Tax Planning for Salaried: Simple and Consistent

Is the new regime better for salaried employees?

If your deductions are limited and you prefer simpler compliance, the new regime can be lower. If you invest regularly in 80C instruments, carry health insurance under 80D, and have HRA or home loan interest, the old regime may be superior. Re-evaluate annually because income and benefits change; choose the regime based on realistic projections, not just theoretical maxima.

How should I manage proofs for claims?

Maintain a cloud folder with month-wise receipts for investments, insurance premiums, rent agreements and landlord PAN, home loan interest certificates, donations and medical bills. Employers often ask for proofs well before the filing deadline—submit on time to avoid excess TDS. Keep scanned copies readable; label files clearly to save time during verification.

What’s an easy year-round routine?

At the start of the year, pick regime, set SIPs for ELSS or planned investments, renew health insurance, and update rent details. Quarterly, review progress and adjust contributions. In the last quarter, reconcile statements, collect certificates and validate payroll declarations. This habit reduces last-minute rush and prevents missed benefits.

How does HRA interact with rent and city?

HRA depends on rent paid, basic salary and whether you live in a metro or non-metro city. Collect rent receipts, maintain a rent agreement, and pay via traceable channels. If you pay rent to parents, ensure documentation is genuine and that landlord PAN is provided where required. Avoid cash payments without records.

Should I buy health insurance just for tax?

Buy insurance for protection first, tax benefit second. Choose adequate sum insured, assess add-ons like room rent capping and sub-limits, and verify network hospitals in your city. Top-up policies are cost-effective for boosting coverage; keep renewal reminders so coverage never lapses.

What about Section 80C choices?

EPF, PPF, ELSS, life insurance premiums and home loan principal are common components. Map them to your goals—ELSS pairs tax saving with long-term equity exposure. Avoid locking funds in products that don’t suit your needs just to save tax; prioritize liquidity and returns aligned to objectives.

How to plan with bonuses and hikes?

When income rises, increase ELSS or NPS contributions and prepay high-interest debt. Don’t expand lifestyle costs immediately; allocate a fixed portion to long-term goals. Update payroll declarations after hikes to prevent excess TDS or underpayment surprises.

Any mistakes to avoid?

Leaving planning to March, missing proof submissions, relying on outdated rules, and buying unsuitable products purely for tax. Follow a checklist and automate where possible. Use our Income Tax Calculator to compare regimes and anticipate liability early.