First, A Note on Tax Regimes
Before diving in, it is crucial to remember which tax regime you have chosen for the financial year 2025-26. The new tax regime offers lower slab rates but forgoes most deductions. The old tax regime has higher slab rates but allows you to claim a wide
variety of deductions to lower your taxable income. The tax-saving strategies discussed here, such as those under Section 80C and 80D, are primarily available only if you opt for the old tax regime. If you have not made any tax-saving investments, the new regime might be more beneficial, but if you have, ensure you are in the right regime to claim them.
Maximise Your Section 80C Investments
Section 80C of the Income Tax Act is the most popular avenue for tax saving, allowing deductions up to ₹1.5 lakh. While many investments under this section require planning, some can be made instantly. A last-minute investment in an Equity Linked Savings Scheme (ELSS) is a great option. ELSS funds can be purchased online in minutes and have the shortest lock-in period of just three years among all 80C options. Other options include making a quick online contribution to your Public Provident Fund (PPF) account or purchasing a 5-year tax-saver Fixed Deposit (FD) through your net banking portal. Even the principal repayment on your home loan counts towards this limit, so ensure you have factored that in before making new investments.
Claim Health Insurance Premiums Under Section 80D
This is a deduction many taxpayers miss. Under Section 80D, you can claim a deduction for health insurance premiums paid for yourself, your spouse, and your dependent children up to ₹25,000 per year. An additional deduction is available for premiums paid for your parents. This limit is ₹25,000 if your parents are below 60 years old and increases to ₹50,000 if they are senior citizens. This deduction is over and above the ₹1.5 lakh limit of Section 80C, making it an excellent way to secure your family’s health and reduce your tax outgo simultaneously. You can even claim up to ₹5,000 for preventive health check-ups within these limits.
Don't Forget Your House Rent Allowance (HRA)
If you live in a rented property and receive House Rent Allowance (HRA) as part of your salary, you can claim an exemption on it. Many employees submit rent receipts to their employers during the year. However, if you forgot to do this or have changed jobs, you can still claim the HRA exemption when filing your income tax return. You will need your rent receipts and possibly the landlord's PAN if the annual rent exceeds ₹1 lakh. Calculate the correct exemption amount as per the rules and claim it in your ITR form to reduce your taxable salary.
Review Your AIS and Form 26AS Thoroughly
This is less of a saving move and more of a crucial-mistake-avoidance step. Your Annual Information Statement (AIS) and Form 26AS contain details of all the high-value transactions, TDS (Tax Deducted at Source), and TCS (Tax Collected at Source) linked to your PAN. Before filing, you must reconcile the income and tax details in your return with these forms. A mismatch is one of the most common reasons for receiving a notice from the Income Tax Department. This review might also remind you of income sources you forgot, like interest from a fixed deposit, helping you file an accurate return and avoid penalties.
Declare Savings Interest and Claim the Deduction
You are required to report all income, including the interest earned from your savings bank accounts. While this might seem like it increases your tax, there is a corresponding deduction you can claim. Under Section 80TTA, you can claim a deduction of up to ₹10,000 on interest income from savings accounts. For senior citizens, the limit is higher at ₹50,000 under Section 80TTB, which also includes interest from fixed deposits. It is a simple two-step process: first, add the interest to your 'Income from Other Sources', and then claim the deduction. It’s an easy win that many people overlook.
Make a Last-Minute Charitable Donation (Section 80G)
If you are charitably inclined, you can also save tax by donating to eligible funds and institutions. Donations made under Section 80G are deductible, though the amount of deduction (50% or 100% of the donated amount) depends on the charity. Many reputable relief funds and charitable trusts accept online donations, making it a quick and easy process. You will receive a receipt which is essential for claiming the deduction. Just ensure the organisation you are donating to is registered under Section 80G to be eligible for the tax benefit. This is a meaningful way to contribute to a cause while also trimming your tax liability.
