As the calendar nears its final page, most people start thinking about winter holidays, bonus plans and crucially, how to trim their tax bill before March arrives.
For salaried and self-employed individuals alike, the last quarter of the financial year often becomes a scramble of incomplete paperwork, half-considered investments and rushed tax-saving decisions. But it doesn’t have to be that way.
With a little foresight, you can cut your tax anxiety, boost your savings and even make better long-term financial choices. Here’s a clear, practical and engaging guide to help you make the most of the tax-saving opportunities still available this year.
First Things First: New Regime or Old Regime?
Before doing anything else, check which tax regime you are under. Since the new income tax regime is now the default system, many taxpayers may have shifted automatically without realising it. Under the new regime, tax slabs are lower, but most deductions (like Section 80C and 80D) are not allowed.
However, the old regime still offers numerous tax-saving routes. The Central Board of Direct Taxes (CBDT) recommends that salaried individuals communicate their preferred regime to their employer early in the year, but you can still switch at the time of filing your income tax return.
If you plan to claim deductions, the old regime is essential.
Maximise Section 80C: Your Biggest Tax Tool
Under the old regime, Section 80C allows a deduction of up to Rs 1.5 lakh. Popular and reliable options include:
- Employees’ Provident Fund (EPF) – Automatically deducted from salary.
- Public Provident Fund (PPF) – Backed by the Government of India with tax-free returns.
- Tax-saving mutual funds (ELSS) – Shortest lock-in among 80C options (3 years).
- Life insurance premiums – Valid for traditional plans and term insurance.
- Principal repayment of a home loan.
- Children’s tuition fees.
The Ministry of Finance notes that most salaried taxpayers under-utilise 80C benefits, often leaving money on the table. A quick top-up to PPF or ELSS can help you catch up before the year ends.
Don’t Miss Section 80D: Health Insurance Saves Tax Too
Health insurance premiums qualify for deductions under Section 80D, which allows:
- Up to Rs 25,000 for self, spouse and children.
- An additional Rs 25,000 for parents (Rs 50,000 if parents are senior citizens).
Home Loan Interest: Section 24(b)
If you have a home loan, you can claim up to Rs 2 lakh on interest paid during the financial year.
This provision is often overlooked by younger homebuyers who are still in the early years of repayment, despite the Reserve Bank of India highlighting the rising proportion of salaried borrowers in retail home loans.
NPS: The Most Under-Rated Tax Saver
The National Pension System (NPS) allows an additional deduction under Section 80CCD(1B).
Extra deduction: Rs 50,000 over and above the 80C limit.
PFRDA data shows that NPS adoption among young earners has grown significantly, as it offers both tax benefits and long-term compounding.
Tax Benefits on Donations: Section 80G
Charitable donations made to registered institutions are eligible for deductions under Section 80G. It is to be noted that not all donations are 100 per cent deductible. Always check the institution’s approval status on the Income Tax Department’s official portal.
Claim Exemptions Through Salary Restructuring
Many salaried earners miss out on tax-efficient components such as:
- Leave Travel Allowance (LTA)
- House Rent Allowance (HRA)
- Food coupons or meal allowances
- Telephone/internet reimbursement
HR experts suggest reviewing your salary structure in January, giving enough time for adjustments.
Use Capital Gains Exemptions Wisely
If you’ve sold property, mutual funds or shares this year, you may be liable for capital gains tax.
Strategies include:
- Investing in Section 54EC bonds (NHAI/REC) to avoid long-term capital gains on property.
- Setting off capital losses against gains.
The Income Tax Act permits carrying forward unadjusted losses for up to eight years.
Keep Your Paperwork Ready
The last-minute rush often leads to mistakes in documentation. Make sure your investment proofs, rent receipts, insurance premium receipts, donation certificates, and capital gain statements are organised. Employers usually freeze proof submission by February.
Why You Should Start Early
Financial planners repeatedly emphasise that tax-saving should be a year-long strategy, not a February panic attack. Starting early helps you:
Avoid suboptimal investment choices
Reduce financial stress
Stay compliant and avoid penalties
As the end of the financial year approaches, even a few well-planned steps can reduce your tax outgo and improve your long-term financial health.
