When it comes to saving taxes, most salaried employees in India are familiar with Section 80C deductions. But did you know there are several other tax-saving opportunities that often go unnoticed? These lesser-known deductions can help you reduce your taxable income and save more money.
In this article, we’ll explore 5 little-known tax deductions that every salaried employee in India should know about. Whether you’re a fresher or a seasoned professional, these tips can help you maximize your savings and keep more money in your pocket. Let’s get started!
- 1. Leave Travel Allowance (LTA)
- 2. House Rent Allowance (HRA)
- 3. Standard Deduction
- 4. Interest on Education Loan (Section 80E)
- 5. Medical Insurance for Parents (Section 80D)
- Bonus Tip: Food Coupons (Section 10(14))
- How to Maximize Your Tax Savings
- Common Mistakes to Avoid
- FAQs About Tax Deductions for Salaried Employees
- Final Thoughts
1. Leave Travel Allowance (LTA)
What is LTA?
LTA is a tax exemption provided to salaried employees for travel expenses incurred during leave. It covers the cost of travel within India for you and your family.
How to Claim It:
- You can claim LTA twice in a block of 4 years.
- The exemption is available only for the shortest distance traveled (economy class fare for air travel or AC train fare).
- Keep all travel tickets and boarding passes as proof.
Pro Tip:
Plan your vacations wisely to make the most of this benefit. For example, if you’re traveling to Goa, ensure you book economy class tickets and keep all receipts.
2. House Rent Allowance (HRA)
What is HRA?
HRA is a component of your salary that helps you pay rent. If you live in a rented house, you can claim a tax deduction on the HRA you receive.
How to Claim It:
- The deduction is calculated as the lowest of the following:
- Actual HRA received.
- 50% of your salary (for metro cities) or 40% (for non-metro cities).
- Rent paid minus 10% of your salary.
- Submit rent receipts and a rental agreement to your employer.
Pro Tip:
If you’re paying rent to a family member, ensure you transfer the rent amount to their bank account and have proper documentation.
3. Standard Deduction
What is Standard Deduction?
Introduced in Budget 2025, the standard deduction is a flat deduction of ₹75,000 available to all salaried employees. It replaces the earlier transport and medical allowances.
How to Claim It:
- The deduction is automatically applied to your taxable income.
- No additional documents or proofs are required.
Pro Tip:
While this deduction is straightforward, ensure your employer reflects it correctly in your Form 16.
4. Interest on Education Loan (Section 80E)
What is Section 80E?
If you’ve taken an education loan for higher studies (for yourself, your spouse, or your children), the interest paid on the loan is eligible for a tax deduction.
How to Claim It:
- The deduction is available for up to 8 years or until the interest is fully paid, whichever is earlier.
- There’s no upper limit on the deduction amount.
- Keep the loan statement and interest certificate from the bank.
Pro Tip:
This deduction is especially beneficial for young professionals repaying education loans. Make sure to claim it every year.
5. Medical Insurance for Parents (Section 80D)
What is Section 80D?
Under Section 80D, you can claim a deduction for premiums paid towards health insurance for yourself, your spouse, children, and even your parents.
How to Claim It:
- For self, spouse, and children: Up to ₹25,000.
- For parents (below 60 years): Up to ₹25,000.
- For senior citizen parents (above 60 years): Up to ₹50,000.
- Total deduction: Up to ₹1.5 lakh (if you and your parents are senior citizens).
Pro Tip:
If you pay for your parents’ health insurance, ensure the policy is in your name to claim the deduction.
Bonus Tip: Food Coupons (Section 10(14))
Many companies provide meal vouchers or food coupons as part of their employee benefits. These are tax-free up to ₹50 per meal (maximum ₹2,100 per month). While this isn’t a deduction, it’s a great way to save on taxable income.
How to Maximize Your Tax Savings
- Plan Ahead: Keep track of all eligible deductions and plan your investments and expenses accordingly.
- Maintain Proper Documentation: Save all receipts, bills, and certificates to support your claims.
- Consult a CA: If you’re unsure about any deductions, consult a Chartered Accountant for personalized advice.
Common Mistakes to Avoid
- Not Claiming HRA While Living with Parents: If you’re paying rent to your parents, you can still claim HRA.
- Ignoring LTA: Many employees forget to claim LTA, missing out on significant savings.
- Overlooking Small Deductions: Even small deductions like food coupons can add up over time.
FAQs About Tax Deductions for Salaried Employees
1. Can I claim both HRA and a home loan deduction?
Yes, you can claim both, but only if you’re living in a rented house while repaying a home loan for another property.
2. Is the standard deduction available to pensioners?
Yes, pensioners can also claim the standard deduction of ₹50,000.
3. Can I claim deductions without Form 16?
Yes, but you’ll need to provide all supporting documents while filing your ITR.
Final Thoughts
Tax-saving doesn’t have to be complicated. By taking advantage of these little-known deductions, you can significantly reduce your taxable income and save more money. Whether it’s claiming HRA, LTA, or health insurance premiums, every rupee saved counts.
So, the next time you file your taxes, don’t just rely on Section 80C. Explore these lesser-known deductions and make the most of your hard-earned money. Happy saving!
Disclaimer: The information in this article is for general informational purposes only and does not constitute financial, legal, or tax advice. While we strive to provide accurate and up-to-date details, tax laws and regulations may change. We recommend visiting the official Government of India websites and consulting with a tax professional to verify the latest rules and compliance requirements before making any financial decisions.
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