Tax-Saving Schemes for Salaried Employees: Your Guide to Smart Investments for FY 2025-26

Introduction

For every salaried professional, effective tax planning for salaried professionals is not only about lowering liabilities but also about building long-term wealth. The Indian Income Tax Act offers multiple tax-saving schemes for salaried individuals to legitimately save on taxes through strategic investments and eligible expenses. This guide covers the best tax saving investments FY 2025-26, explaining how you can keep more money in your pocket while securing your financial future.

1. Best Tax Saving Options Under Section 80C for Salaried Employees

Section 80C investments remain the most popular deduction tool for salaried individuals. You can invest or spend up to ₹1.5 lakh annually in these top tax saving instruments India:

• Public Provident Fund (PPF tax benefits)
• Employee Provident Fund (EPF)
• ELSS mutual funds (best ELSS funds 2025 for higher returns)
• Life Insurance Premiums (tax benefits of insurance policies)
• National Savings Certificates (NSC)
• Tuition fees for children (tuition fees tax exemption)
• Principal repayment on home loan
• Sukanya Samriddhi Yojana

Tax saving tips for salaried employees in India for FY 2025-26 — maximize the limit by combining PPF, ELSS, NSC, and insurance premiums, or use a mutual fund SIP for tax saving.

2. How to Claim an Extra ₹50,000 Tax Deduction with NPS Under Section 80CCD(1B)

Beyond 80C, the National Pension System gives you an additional ₹50,000 deduction. The section 80CCD(1B) NPS advantages include retirement-focused savings, market-linked growth, and extra tax relief.

How does NPS help in tax saving in new tax regime?
Under the Old Regime, NPS offers deductions under both 80C and 80CCD(1B); in the New Regime, deductions are limited, but employer contributions to NPS remain exempt.

3. Section 80D Health Insurance Tax Benefits: Save Up to ₹50,000

Premiums for health coverage qualify for deductions up to ₹25,000 (below 60 years) and ₹50,000 for senior citizens. This tax deduction under section 80D covers self, spouse, dependent children, and parents. Prioritize quality health insurance for financial protection and tax efficiency.

4. How to Save Tax on Home Loans Under Sections 24 and 80C

• Interest: Up to ₹2 lakh under Section 24.
• Principal: Under Section 80C, part of your ₹1.5 lakh limit.

Home loans offer shelter along with tax efficiency — making them one of the best tax saving investments FY 2025-26.

5. How to Claim House Rent Allowance (HRA) Exemption for Salaried Employees

Claim HRA exemption for salaried employees by providing rent receipts and meeting criteria based on salary, rent paid, and city of residence. Note: Not available under New Regime.

6. Smart Tax Planning with Education Loan Benefits Under Section 80E

Interest on education loans is fully deductible for up to 8 years. This helps in financing learning without overburdening taxes, offering smart planning for future earnings.

7. Maximize Tax Savings Through Section 80G Charitable Contributions

Contributions to notified institutions allow deductions of 50% or 100% depending on the organisation. While available in the Old Regime, donations under the New Regime generally don’t qualify.

8. Flat ₹75,000 Standard Deduction Benefit for FY 2025-26 Salary Earners

A flat ₹75,000 deduction from salary income is available to salaried employees without investment — ideal for those choosing lower-risk tax benefits.

9. Extra Tax-Saving Ideas for FY 2025-26 Beyond Section 80C

Explore:

• Tax saving fixed deposits (5 year bank FD for tax saving)
• Tax-saving ULIPs
• Senior citizen saving scheme tax benefit

Low-risk debt-oriented mutual fund SIP for tax saving products

Choosing Between Old and New Tax Regime

• Old Regime: Allows claiming section 80C investments, health insurance, HRA, etc.
• New Regime: Lower slab rates, fewer deductions — better for those with minimal eligible investments.

Conclusion

Tax saving is part of a holistic strategy for wealth building. By blending PPF tax benefits, ELSS mutual funds, NPS, insurance, HRA, and home loan deductions, salaried individuals can maximize savings in FY 2025-26. Always compare regimes, assess investment returns, and select the right mix based on your personal goals.

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