Tax Planning and ITR Filing Tips for Salaried Employees

Tips for Salaried Employees to Optimize Tax Planning and ITR Filing in India

Tax Planning

Tax planning and filing income tax returns (ITR) are crucial aspects of financial management for salaried employees in India. Proper tax planning not only helps in optimizing tax liability but also ensures compliance with tax laws.

This article aims to provide valuable tips to salaried employees for effective tax planning and smooth income tax e-filing, making the process less daunting and more beneficial.

Also read: 5 Best Ways To Save Tax For Salaried Employees

1. Understanding Income Tax Slabs and Deductions

In order to effectively engage in tax planning, it is crucial to have a good understanding of the income tax slabs in India. The amount of tax an individual has to pay is determined by the tax rates corresponding to different income ranges. Moreover, it is important to take into consideration the different deductions and exemptions that can be availed under the Income Tax Act, including Section 80C, Section 80D, and Section 24(b). Effectively utilizing these deductions can greatly decrease the amount of taxable income you have.

2. Invest in Tax-Saving Instruments

Investing in tax-saving instruments is a highly effective method for optimizing tax planning. You can utilize various options such as the Public Provident Fund (PPF), Employee Provident Fund (EPF), National Savings Certificate (NSC), Equity-Linked Savings Scheme (ELSS), and tax-saving fixed deposits to avail deductions under Section 80C. Investing in these instruments not only helps you save on taxes but also allows you to build a corpus for your future financial goals.

3. Opt for Voluntary Provident Fund (VPF)

If your employer permits, you may want to consider contributing an amount greater than the mandatory EPF amount by utilizing the Voluntary Provident Fund (VPF). Contributions made to the Voluntary Provident Fund (VPF) are entitled to the same tax advantages as the Employee Provident Fund (EPF). This implies that VPF contributions are eligible for deductions under Section 80C. By making this extra investment, you can effectively lower your taxable income and maximize your tax savings.

4. Avail of Home Loan Benefits

If you have obtained a home loan to buy or build a house, you are eligible to receive deductions on both the principal amount and the interest paid. These deductions can be claimed under Sections 80C and 24(b), respectively. In addition, individuals who are purchasing a home for the first time may qualify for an extra deduction of up to ₹50,000 on interest payments, according to Section 80EEA. By taking advantage of these benefits offered by home loans, you can effectively reduce the amount of taxes you owe during income tax e-filing.

5. Consider NPS (National Pension System)

Investing in the National Pension System (NPS) can be a smart choice for saving on taxes, as it provides the added advantage of tax benefits of up to ₹1.5 lacks under Section 80CCD(1B). Salaried individuals have the option to make voluntary investments in the National Pension Scheme (NPS). This not only lowers their taxable income but also aids in the creation of a retirement fund.

6. Health Insurance Deduction (Section 80D)

Not only is investing in health insurance a wise financial decision, but it also offers tax advantages. Deductions for health insurance premiums can be claimed under Section 80D. This includes coverage for yourself, your family, and your parents. Make sure you take full advantage of this deduction to obtain the greatest tax benefit while also safeguarding the health of your family.

7. Submit Investment Proofs to the Employer

At the commencement of the fiscal year, salaried employees are required to furnish investment proofs to their employers. By providing these proofs, you can ensure that your employer takes into account the eligible deductions when calculating the monthly TDS (Tax Deducted at Source). By taking this approach, you can effectively minimize your tax payments throughout the year and ultimately increase your net income.

8. File ITR on Time

Income tax e-filing in a timely manner is essential in order to prevent any penalties or interest charges. It is important to file your income tax return (ITR) even if you do not owe any taxes as long as your income exceeds the basic exemption limit. Filing your income tax return (ITR) promptly also guarantees that you possess a well-documented financial record, which could be necessary for various reasons like securing loans or visas.

9. Keep Records and Documentation

It is crucial to keep accurate records and documentation of your income, investments, expenses, and deductions in order to file your income tax return (ITR) correctly. Maintaining well-organized records facilitates a seamless tax filing process and minimizes the likelihood of errors. Make use of digital tools or applications to store electronic versions of your financial documents, ensuring convenient access and retrieval.


Efficiently managing finances is crucial for salaried employees. Individuals can strategically invest in tax-saving instruments and claim eligible benefits by gaining a thorough understanding of income tax slabs, deductions, and exemptions. By getting a head start and strategically mapping out investments throughout the year, you can achieve a more seamless tax planning process and steer clear of any last-minute rush. It is important to keep in mind that consulting with a certified tax expert can offer tailored guidance and assistance when it comes to making informed financial choices.


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