Section Applicable: Tax exemption on Employee Contribution to Provident Fund (PF) can be claimed under Section 80C.
Description: A benefits scheme for salaried employees, the EPF contribution is deducted from the employee’s monthly salary. This limit is set out of the total salary and is capped at 12% of the basic salary and the Dearness Allowance (DA). After deduction, this amount gets deposited in a PF scheme recognized by the Government.
Exemption Limit: The maximum exemption limit is Rs. 1.5 lakhs per annum.
Who can claim: EPF can be claimed by salaried employees, where the employer deducts up to 12% from basic salary and DA if applicable.
Documents required: Your monthly salary slips will be required to calculate the PF amount deducted from your salary.
Claim regime: You can claim EPF deduction under 80C using the old tax regime. As per the new tax regime, you must forgo this deduction.

Standard Deduction

Section Applicable: Exemption can be claimed under Section 16(i)/(ia)
Description: The Income Tax department gives salaried individuals or pensioners a flat deduction. This deduction was introduced in 2018 instead of medical expenses and travel allowance reimbursement.
Exemption Limit: A standard deduction of Rs. 50,000 can be claimed.
Who can claim: Salaried individuals and pensioners can claim standard deductions. Pensioners can also claim standard deductions under this section.
Documents required: No documents need to be submitted to claim the standard deduction.
Claim regime: You can claim the flat deduction of Rs. 50,000 under the new tax regime.

Professional Tax

Section Applicable: Professional tax is deducted under Section 16(iii).
Description: The professional tax that an employee pays from his salary is exempted from the total income received annually.
Exemption Limit: Rs. 2500 per annum is the exemption limit that is allowed by the Income Tax department.
Who can claim: Any employee whose professional tax gets deducted can claim this exemption.
Documents required: No documents are required as the employer deducts this at the time of salary disbursal.
Claim regime: Professional tax exemption cannot be claimed under the new tax slab regime.

Exemption of Leave Encashment

Section Applicable: Section 10(10AA) (ii) is applicable here.
Description: Leave Encashment is the money you receive if you haven’t utilised your paid leave while employed. This money is exempted from paying Income Tax if you receive it during retirement or on leaving employment.
Exemption Limit: Rs. 3,00,000 per annum is exempted if you receive it after resigning or at retirement. If you receive this amount while employed, it is fully taxable.
Who can claim: Salaried employees can claim exemption on resigning or on retiring.
Documents required: No documents are required to be submitted.
Claim regime: It is exempted under the new and old tax regimes.

Exemption Under Section 89(1)

Section Applicable: Section 89 (1)
Description: Income received in a financial year is taxed as per the tax slabs. If you receive your salary or pension as arrears, it can add to your taxable income. However, you can claim tax exemption for the income that is received as arrears under Section 89(1) if it is credited in the following fiscal year.
Exemption Limit: Exemption can be claimed to the amount you receive as arrears.
Who can claim: An employed individual or a retired employee can claim an exemption if the income is received in the next financial year.
Documents required: Form 10E needs to be filed before filing Income Tax Returns.
Claim regime: You can claim this exemption under the new as well as the old tax regime.

Exemption from the Receipt Upon Opting for Voluntary Retirement

Section Applicable: Section 10 (10C)
Description: If a salaried employee has retired voluntarily, they can claim tax exemptions on the compensation that has been received.
Exemption Limit: Maximum amount of Rs. 5,00,000.
Who can claim: Employees who have worked for more than ten years or are above the age of 40 years can claim this exemption.
Documents required: None. However, a final document from the employer will be required stating that the final settlement can be collected at retirement.
Claim regime: You can claim this exemption under the new and old tax regimes.

Pension

Section Applicable: Under Section 80CCC and 80CCD, money invested in pension plans can be tax exempted.
Description: If you are wondering how to save income tax on salary, a pension fund can be the answer as they tend to be a good investment if you are looking for a flow of income post-retirement. Multiple pension plans attract tax exemptions, including NPS, certain ULIPs, immediate annuity plans, etc.
Exemption Limit: Rs. 1.5 lakhs per annum for all contributions made under Sub Section 80C, except for Section 80CCD, where you can claim an additional Rs. 50,000 on NPS.
Who can claim: Any taxpayer investing in a pension fund can claim and save tax on salary.
Documents required: Proof of payment or statement of the transaction will be needed to save tax.
Claim regime: Investments made in pension plans can only be claimed under the old tax regime and not the new one.

Gratuity

Section Applicable: Section 10(10) is applicable here.
Description: The money you receive from your employer for services rendered over 5 years is termed gratuity.
Exemption Limit: Rs. 20 lakhs.
Who can claim: The employee who has received gratuity can claim tax exemption only after the money is received on retirement or completion of 5 years or by the legal heirs of the deceased.
Documents required: When gratuity is received, a document from the employer should be taken on record, where the bifurcation of the gratuity calculation is stated clearly.
Claim regime: Gratuity benefits can be claimed in the new as well as the old tax regime.

Donations to Political Parties

Section Applicable: Section 80 GGC is applied here.
Description: Any donation that has been made to a political party that has been enlisted as per Section 29A of the Representation of the People Act of 1951.
Exemption Limit: 100% exemption of the amount can be claimed by the taxpayer who donates to a registered political party.
Who can claim: The taxpayer who donates can claim the deduction.
Documents required: Donation receipt where the details of the party are mentioned.
Claim regime: This tax exemption cannot be claimed under the new tax regime.

Meal Coupons

Section Applicable: Rule 3 (7) (3) of the Income Tax Rules
Description: The food or meal allowance that the employer provides to the employee is exempted based on specified limits.
Exemption Limit: The amount exceeding Rs. 50/- will be taxable. So if you spend two meals, you will be spending Rs. 100 per day (50*2=100). Monthly expenses would be 22 days x Rs. 100 = Rs. 2200. The yearly calculation would be for 260 days. Hence the annual exemption can be calculated as 260 days x Rs. 100 = Rs. 26000.
Documents required: Nil
Claim regime: Taxable under the new tax regime.

Car Leased by Employer

Section Applicable: Rule 3(2)(A)
Description: There are two parts to this:

1. If an employee uses a company-owned car, the employee will have to pay a perquisite of Rs. 2700 per month if the engine capacity is up to 1.6 litres or Rs. 3300 if its capacity is more than 1.6 litres. Here, the employer pays the lease, maintenance, driver’s salary, etc..
2. Leasing a car from the employer can reduce the taxable income, as the lease amount of the car will be deducted from the employee’s salary.

 

Exemption Limit: Employees can get up to 30% of tax exemption.
Who can claim: Only an employee leasing the car from their organisation.
Documents required: If signed with an employer, a lease document stating the details of the transaction.
Claim regime: This can be claimed under the old tax slab.

Expenses Related to Internet or Phone

Section Applicable: Rule 3(7)(ix) of the Income Tax Act.
Description: Telephone or internet charges incurred by the employee will be exempted from tax when the employer reimburses it.
Exemption Limit: Capped by the employer and, once received, will be 100% exempted from taxable income.
Who can claim: Taxpayers who use their phone or internet connection for official purposes. However, the reimbursement should be covered in the CTC or the employee's salary package.
Documents required: Telephone or internet bills in the name of the employee.
Claim regime: It can be claimed under the old tax regime.

Medical Insurance

Section Applicable: Section 80D is applicable here.
Description: Any premium the taxpayer pays for medical insurance purchased in their name or their spouse’s, parents, or children’s name can be exempted from the taxable income.
Exemption Limit: Rs. 25,000 for self, spouse, or children; Rs. 50,000 for parents. Additional Rs. 5000 can be claimed for preventive health check-ups. The maximum deduction that can be availed as a family consisting of self, spouse, children, and senior family members over 60 is Rs. 1,00,000.
Who can claim: Any individual purchasing and paying a premium for medical insurance for themselves or a family member can claim a deduction under Section 80D.
Documents required: Premium paid receipts in the name of the taxpayer.
Claim regime: Deductions under Section 80D can only be claimed under the old tax regime.

Home Loan

Section Applicable: Section 80EE, Section 80EEA, and Section 24B can be applied here.
Description: This section of the Income Tax Act states that if a taxpayer has purchased a residential property on loan, either singularly or jointly with a spouse, they can claim exemptions on their income on the interest paid on the loan availed.
Exemption Limit: Both Sections 80EE, 80EEA, and Section 24b provide tax exemption on a residential property on loan. However, the exemption limit for both is different.

	Section 80EE	Section 80EEA	Section 24B
Maximum Exemption Amount	Rs. 50,000 per annum	Rs. 1.5 Lakhs per annum	Rs. 3.00 lakhs per annum
Loan Amount	Rs. 35 lakhs	Unspecified	NA
Property Value	Up to Rs. 50 Lakhs	Up to Rs. 45 Lakhs	Rs. 3.00 lakhs per annum
Loan Period	1St April 2016 to 31st March 2017	1st April 2019 to 31st March 2021	NA

Section 80EE and Section 80EEA cannot be claimed together. However, Section 80EEA can be claimed with Section 24B. You can get a maximum exemption of up to Rs. 3.5 lakhs per annum.
Who can claim: An individual who has purchased a house in their name wholly or jointly and is paying taxes can claim tax exemption.
Documents required: Property and loan documents will be needed to ascertain the value of the property and the interest amount.
Claim regime: Sections 80EE and 80EEA cannot be claimed in the new tax regime.

Education Loan

Section Applicable: Section 80E
Description: The interest paid on an education loan that the taxpayer has availed to fund the education of self, children, or a guardian can be deducted from the annual income at the time of filing an ITR.
Exemption Limit: Though there is no limit to the exemption amount, the exemption benefit can be utilised for a maximum period of 8 years from when the repayment starts or until the interest is fully paid.
Who can claim: An individual who is availing a loan for self/child or is under legal guardianship can claim this exemption.
Documents required: Loan documents with the principal and interest amounts mentioned separately and clearly.
Claim regime: Deductions under 80E can only be applied in the old tax regime.

Mutual Funds

Section Applicable: Section 80C will be applied here during tax liability calculation.
Description: Investing in Equity Linked Savings Scheme (ELSS) are a class of mutual funds that help save tax on salary under Section 80C.
Exemption Limit: Rs. 1.5 lakhs is the exemption limit. ELSS have a lock-in period of 3 years. Hence, you will need to be invested for a minimum period. If it is withdrawn before the end of the lock-in period, tax liability will be applicable.
Who can claim: A tax-payer who has invested funds in ELSS in their name.
Documents required: Statement of Transaction for a fiscal year.
Claim regime: Section 80C can be claimed under the old tax regime.

Deductions

If you are wondering how to save tax for a salary above Rs. 10 lakhs, then investments can be the way to move forward. Investments, in various forms, help save tax and build a financial nest for the future. There are multiple tools and methods to save tax. However, finding the right one is important. ULIPS, Life Insurance, Health Insurance, Money Back Plans, etc., are some instruments you can consider when investing.

It is important to know which tax regime you wish to choose while filing your Income Tax returns, as most deductions can only be claimed under the old tax regime.