How to Save Tax on Salary?

Salaried employees have a huge task in hand – to juggle between income and tax savings. They try to find ways to save tax within the paradigm of laws to retain the maximum net income in their hands. There are several tax planning avenues like exemptions, tax deductions, and allowances tools that help make a significant impact on your financial planning. Let’s have a look at some of the tax-saving options and how to save tax on salary.

Read more
group-insurance

Get right expert advice

Hassle free policy

Speedy Claims

Fast-track your search with instant quotes from top insurers

Get ₹30 lakh cover starting at ₹45,000+

Step 1/2

Get ₹30 lakh cover starting at ₹45,000+

secure-icon We don't spam
Get Updates on WhatsApp
View Plans
By clicking on "" you agree to our Privacy Policy and Terms Of Use

Get ₹30 lakh cover starting at ₹45,000+

Step 2/2
Get Updates on WhatsApp
Fast-track your search with instant quotes from top insurers
Expert advice

Buy right

Instant policy

Quick & Hassle free

Dedicated team

Speedy Claims

How to Save Tax on Salary?

As a salaried person, if you wonder how to save tax on your salary, there are a couple of ways you can achieve that. You can save tax under the provision of the Income Tax Act of 1961. Tax planning can be achieved by effectively utilizing these tax benefits by salaried employees to save their hard-earned money.

Here are some of the most common tax savings options for salaried employees.

  1. House Rent Allowance (HRA)

    Individuals who live in a rented apartment can claim House Rent Allowance (HRA) to lower tax payments. HRA, forming a part of one’s salary structure, is exempted from tax.

  2. Employees’ Provident Fund (EPF)

    Employee’s contribution to the Employees’ Provident Fund (EPF) is a well-known tax-saving option. Under the EPF, the employer and the employee contribute equally (in most cases 12% of the individual’s salary) to the Employee Provident Fund. The contribution made by the employee can be claimed for tax exemption under Section 80C. Also, the accumulated fund in an employee’s PF account (with interest earned) is tax-free.

  3. Public Provident Fund (PPF)

    This is also a tax-saving option that falls under the EEE (Exempt-Exempt-Exempt) category. PPF provides a return on investments for salaried persons that are free from tax.

  4. Equity Linked Savings Scheme (ELSS)

    Investment in Equity Linked Savings Scheme (ELSS) is eligible for deduction from an employee’s taxable income under section 80C. ELSS is a highly preferable tax saving option for salaried individuals as it provides a dual benefit – relatively higher returns with tax benefits.

  5. National Pension Scheme (NPS)

    One of the long-term tax saving options available for salaried people in India is National Pension Scheme (NPS). This investment plan is most suitable for people with a lower risk appetite.

  6. Health Insurance Premium

    The health insurance plan provides financial security to individuals and their families during medical emergencies. Apart from safeguarding financial interests, health insurance also helps in saving tax for salaried employees.

Tax Saving Through Group Health Insurance

Corporate insurance policies such as employee medical insurance policies are offered by employers to their employees and serve the same purpose as an individual health policy. Even in the context of tax benefits, a group insurance policy is beneficial for a salaried employee. Let us look at the tax benefits of group health insurance premiums under the following scenarios:

  1. When an employee pays the complete premium amount: The employee can claim the entire premium amount as a tax deduction under Section 80D. However, the amount should not exceed the maximum deduction of Rs 1 lakh.
  2. When an employee pays a partial premium amount: The employee can claim an amount up to the extent to which the premium is paid by the employee
  3. When the employer pays the complete premium amount: The employee cannot claim any tax benefit.

Conclusion

As a salaried person, tax planning is very crucial. It is thus important to learn about various options on how to save tax on salary and then take an informed decision. Group health insurance is one such product that provides financial safety at the time of medical need and is tax deductible, both for the employer and the employee.

Written By: PolicyBazaar - Updated: 09 March 2023
Policybazaar for Business - Group Insurance - Customer Reviews
View all
4.1/5
Based on 4 reviews
4.1
out of 5
Based on 4 reviews
0 users
4 users
0 users
0 users
0 users
4 January 31, 2022
Rahul
Good Deals
We bought corona group health cover for our firm. It is still risky and to make sure the safety for everybody, we bought the cover. It was on a good deal on Policybazaar.
Noida
4 January 30, 2022
Divesh
Quicker Than Expected
I bought group covid insurance for me and my team We are a small start-up and really needed this cover. I bought it from PolicyBazaar which was quicker than I expected.
Muktsar
4.3 January 30, 2022
Ajeet
Health Cover
As we have started travelling again, I had book group Covid-19 health plan for me and my employees. We are travelling frequently now and obviously needed this health cover.
Kanpur
4 January 30, 2022
Avadhesh
Quick Claims
For myself and my staff, I purchased group covid insurance. This cover was critical for us as a modest start-up. I purchased it through PolicyBazaar, and it arrived much sooner than I anticipated.
Gurgaon