How to Minimize Your Income Tax in India in 2024

Income tax holds a crucial position in India’s financial landscape. From salaried employees to self-employed individuals, everyone has to pay taxes. Various tax-saving schemes are available to reduce tax liabilities and provide a pathway to financial security. Understanding these tax deduction schemes can provide financial security and peace of mind.

In the fiscal year 2023-24, the government of India collected ₹18.38 lakh crore in direct taxes, marking a 17.30% increase. Individuals can ease tax burdens by investing in tax-saving options like mutual funds, the National Pension System (NPS), the Public Provident Fund (PPF), and the Equity-Linked Savings Scheme (ELSS). all offering tax benefits under Section 80C for savings and financial goals.

This article highlights the best tax-saving schemes in India for 2024 and how to use them. helping you save money and keep more of your earnings.

Understanding Income Tax

It’s important to understand how tax deduction works in India and the tax-saving options in India.

Check out below how to save tax in India, from the income tax calculation to various tax deductions and exemptions.

1. Calculation of Income Tax

The tax authorities calculate income tax based on the income you earn throughout the financial year. The income tax rate is progressive, meaning the more you earn, the more tax you pay. The taxable income includes salary, capital gains, house property income, profits and gains from business or profession, and other sources of income. The authorities determine the applicable income tax rate based on your taxable income.

2. Various Deductions and Exemptions

In India, numerous deductions and exemptions are available to reduce the tax burden. Various tax-saving schemes, like the Public Provident Fund (PPF) and the Equity-Linked Savings Scheme (ELSS), assist individuals in reducing their tax liabilities.

Deductions can be claimed to save income tax on investments in health insurance, life insurance, pension schemes, and other approved investments. Tax-free incomes, including LTA (Leave Travel Allowance), HRA (House Rent Allowance), and other allowances, are exempt from income tax.

Salary Range and Corresponding Income Tax in India

It is important to understand how to save tax on salary range and income tax in India. To help with this, we will explain the tax-saving schemes, slabs and rates for 2023-24 and provide examples and income tax calculations.

Below are the two tables showing the Indian income tax slabs and rates for 2023-24.

Income Tax Slabs and Rates for 2023-2024

1. Up to Rs 2.5 lakhs: Exempt from taxation (For individuals below 60 years and non-senior citizens)

2. Rs 2.5 lakhs to Rs 5 lakhs: Exempt from taxation

3. Rs 5 lakhs to Rs 10 lakhs: tax slab is 20% of income

4. Rs 10 lakhs to Rs 20 lakhs: tax slab is 30% of income

5. Above Rs 20 lakhs: tax slab is 40% of income

Income Tax Calculations and Examples

Example 1: Income of Rs 7.5 lakhs

1. Up to Rs 5 lakhs: Exempt from taxation

2. Rs 5 lakhs to Rs 7.5 lakhs: 20% of Rs 2.5 lakhs = Rs 50,000

Total Income Tax Amount: Rs 50,000

Example 2: Income of Rs 25 lakhs

1. Up to Rs 5 lakhs: Exempt from taxation

2. Rs 5 lakhs to Rs 10 lakhs: 20% of Rs 5 lakhs = Rs 1 lakh

3. Rs 10 lakhs to Rs 20 lakhs: 30% of Rs 10 lakhs = Rs 3 lakhs

4. Rs 20 lakhs to Rs 25 lakhs: 40% of Rs 5 lakhs = Rs 2 lakhs

Total Income Tax Amount: Rs 6 lakhs

Examples of income tax calculations based on different income levels.

Additional Considerations

Income tax calculations and examples depend on the income earned in a financial year. These income tax slabs and rates apply only for the financial year 2023-24.

Tax Saving Schemes and Rebates

In India, various income tax rebates and tax-saving methods exist to help reduce the tax burden. It is always advisable to consult a qualified tax professional for the best advice and guidance.

How to Save Tax in India: Tax Saving Options

Tax is unavoidable for most of us, but with the right knowledge and planning, you can make the most of your tax liabilities and save more money come tax time.

Below, we delve into 15 detailed tax-saving strategies to help you save taxes in India.

1. Employee Provident Fund (EPF)

The Employee Provident Fund (EPF) is a mandatory employee savings scheme. The Employees’ Provident Fund Organisation (EPFO) manages it under the Ministry of Labour and Employment. Employees contribute 12% of their basic salary and dearness allowance towards the scheme. Your employer deducts a portion of your salary monthly towards EPF.

You can claim it as a tax deduction up to a maximum of Rs 1.5 lakh in a financial year. The scheme offers employees a retirement corpus, a pension, and insurance benefits.

The EPFO offers an online portal where you can access account details, submit claims, and track their status. The scheme also provides partial withdrawal options for emergencies like marriage, education, or medical treatment.

You can transfer the EPF account from one employer to another, as it is portable. Government-determined interest rates on contributions are frequently higher than bank savings rates. The scheme is tax-exempt at the time of contribution, interest accrual, and withdrawal. The EPFO also offers employees the option of voluntary contribution, known as the Voluntary Provident Fund (VPF).

2. Public Provident Fund (PPF)

The Public Provident Fund (PPF) is a long-term, government-backed savings scheme. It has a tenure of 15 years and offers an attractive interest rate, currently set at 7.1% per annum. You can open the scheme at any post office or authorised bank branch.

One can invest a minimum of 500 rupees and a maximum of 1.5 lakh rupees in a financial year. The deposits made under PPF are eligible for tax deductions under Section 80C of the Income Tax Act.
Individuals, including minors, can open PPF accounts, yet they can only have one account in their name. The scheme also offers the option of partial withdrawals after the fifth year of account opening. However, the withdrawals are subject to certain conditions.

PPF also allows for loans against the account balance after three years. Furthermore, the scheme carries no risk or market fluctuation, making it a secure investment choice for risk-averse investors. Additionally, the account can be extended for five years after 15 years, with or without new contributions, and the interest earned remains tax-free.

3. National Pension System (NPS)

The NPS is a government-backed retirement savings scheme for salaried individuals and self-employed professionals. It is a government-sponsored pension scheme. The government introduced it in 2004 for government employees and extended it to all citizens in 2009. NPS aims to provide retirement income security to individuals.

The Pension Fund Regulatory and Development Authority (PFRDA) regulates it. NPS has two types of accounts: Tier-I and Tier-II. Tier-I is mandatory, with a lock-in period until age 60, whereas Tier-II is optional and has no lock-in period. NPS offers a range of investment options, including equity, corporate bonds, government securities, and alternative investments.

You invest a percentage of your salary (up to 10%) in NPS. The contribution to NPS is eligible for a tax deduction of up to Rs 1.5 lakh under Section 80C and an additional deduction of Rs 50,000 under Section 80CCD.

The maturity amount of NPS is taxable, yet individuals can withdraw 60% of the corpus at the age of 60 and allocate the remaining 40% to purchase an annuity. NPS is favored for its low-cost structure, flexibility, and transparency.

Also Read: Mastering Tax Planning: Why Tax Planning Matters More Than Ever in Today’s Economy

4. Equity-Linked Saving Scheme (ELSS)

Equity-Linked Saving Scheme (ELSS) is a popular tax-saving investment option. ELSS is a type of mutual fund that invests primarily in equity shares. This comes with a three-year lock-in period. The scheme provides tax benefits under Section 80C of the Income Tax Act. You can claim the amount invested in ELSS as a tax deduction under Section 80C, up to a maximum of Rs 1.5 lakh in a financial year. ELSS is a high-risk investment option that aims to generate long-term capital gains for investors.

Experienced fund managers who strive to produce higher returns than the benchmark index are in charge of it. ELSS funds have a diversified portfolio and invest across different sectors and market capitalizations to reduce risk.

Investors can invest in ELSS through a lump-sum or systematic investment plan (SIP). ELSS is a good investment option for individuals with a high-risk appetite and looking for tax-saving options.

5. Tax-Saving Fixed Deposits (FDs)

Tax-saving fixed deposits (FDs) are popular investment options in India. These FDs have a lock-in period of five years and offer tax benefits up to Rs 1.5 lakh under Section 80C of the Income Tax Act. The interest earned on these FDs is also taxable. The rate of interest offered varies among banks and ranges between 5% and 7%.

You can open these FDs with a minimum investment of Rs 100 and can go up to Rs 1.5 lakh. Premature withdrawal is not allowed except under specific circumstances. The bank fixes the interest rate, ensuring it remains constant throughout the tenure. Tax-saving FDs are secure investments as they are backed by the government, making them a reliable option for individuals aiming to save taxes and earn a fixed income.

6. National Savings Certificate (NSC)

The National Savings Certificate (NSC) is a government-backed savings instrument in India. It is available at all post offices and selected banks. The NSC has a fixed interest rate that the authorities revise quarterly. The current interest rate is 6.8% per year. It has a lock-in period of five years, and the minimum investment amount is Rs 100. The interest earned on NSC is taxable, yet it qualifies for tax benefits under Section 80C of the Income Tax Act.

You can claim the amount invested in these certificates as a tax deduction under Section 80C, up to a maximum of Rs 1.5 lakh in a financial year.

Both an individual and a group of people can purchase NSC. Investors can also use it as collateral for loans. The investor receives the investment amount and accumulated interest upon maturity. If there’s a premature withdrawal, the investor receives the interest earned until that point. NSC is a safe investment option with guaranteed returns suitable for risk-averse investors.

7. Senior Citizen Savings Scheme (SCSS)

The Senior Citizen Savings Scheme (SCSS) in India is a government-backed savings scheme for senior citizens. The scheme offers an interest rate of 7.4%, subject to change. Investors can invest a maximum of Rs 15 lakh in this scheme. It has a maturity period of 5 years, with the option to extend for an additional three years.

The scheme is available at designated post offices and public-sector banks. The minimum age to invest in this scheme is 60 years old, while those who have retired can invest at 55. The scheme pays out taxable interest quarterly to investors.

In the case of premature withdrawal, the interest rate will be reduced by 1.5%. The SCSS scheme is a good option for senior citizens looking to invest their savings for a fixed time with the assurance of government backing and a decent interest rate.

8. Unit Linked Insurance Plans (ULIPs)

Unit-Linked Insurance Plans (ULIPs) are investment products combining life insurance and investment. ULIPs are investment-cumulative insurance plans that offer both life insurance and market-linked returns. ULIPs in India have become popular due to their flexibility and tax benefits.

These policies offer investors the ability to choose from a variety of investment funds. ULIPs allow policyholders to switch funds based on risk appetite and investment goals. The amount invested in ULIPs is eligible for a tax deduction of up to Rs 1.5 lakh in a financial year under Section 80C of the Income Tax Act.

ULIPs provide life insurance, a benefit paid to the beneficiary upon the policyholder’s death. ULIPs in India allow investors to invest in equity, debt, or a combination. The policyholder pays the premium, and the insurer invests the premium in the chosen fund. ULIPs have a lock-in period of five years, and the maturity value is tax-free.


The charges associated with ULIPs in India are premium allocation, policy administration, mortality, fund management, and surrender charges. ULIPs must be compared among insurers to ensure the policyholder understands the charges and benefits.

9. Sukanya Samriddhi Yojana (SSY)

Sukanya Samriddhi Yojana is a savings scheme for girl children. The parents or legal guardians of a girl under ten may open the account. The scheme has a tenure of 21 years or until the girl child gets married after reaching the age of 18. The current interest rate is 7.6% per year.

The minimum deposit amount is Rs 250, and the maximum is Rs 1.5 lakh per annum. The account can be opened at any post office or authorised bank. The account can be transferred anywhere in India.

The amount deposited in the account is eligible for tax benefits under Section 80C of the Income Tax Act. One can close the account after the girl child attains the age of 21 or after her marriage of 18 years. Partial withdrawals of up to 50% of the balance can be made after the girl turns 18. The scheme encourages parents to save for their girl child’s education and marriage expenses.

10. Life Insurance Premiums

Life insurance premiums vary depending on the type of policy and the insurer. Premiums can be paid monthly, quarterly, semi-annually, or annually. Age, gender, health, occupation, and lifestyle choices are just a few variables that affect the premium amount. The premiums paid towards life insurance premiums are eligible for a tax deduction under Section 80C, up to a maximum of Rs 1.5 lakh in a financial year.

The younger and healthier the policyholder, the lower the premium. Smokers and those with pre-existing medical conditions may have to pay higher premiums.

Additionally, policies with higher coverage amounts will have higher premiums. It is important to compare different policies and premiums before choosing a life insurance plan. Some insurers may offer discounts or waive premiums for certain groups, such as women or non-smokers. Policyholders can also opt for riders or add-ons to enhance their coverage. It is crucial to understand the terms and conditions of the policy and the premium payment schedule to avoid any lapses in coverage.

11. Health Insurance Premiums

Various factors affect health insurance premiums. Age, medical history, family history, and lifestyle habits are some major factors affecting the premium amount. Health insurance premiums are eligible for a tax deduction under Section 80D, up to a maximum of Rs 1.5 lakh in a financial year. Premiums also vary depending on the type of plan and the coverage offered.

Reading the policy document thoroughly before purchasing a health insurance plan is essential. The premium can be paid monthly, quarterly, or yearly. Non-payment of premiums can lead to policy termination. The premium can be reduced by opting for a higher deductible or co-pay.

It is crucial to compare different plans and their premiums before deciding. Health insurance premiums in India are subject to change, and the insured must be aware of any changes made by the insurance company. Understanding the factors affecting the premium and knowing the policy terms are crucial for informed health insurance purchases.

12. Donations to Charitable Institutions

Donating to charitable institutions is a tax-saving option in India. Individuals and companies can claim tax deductions for donations from approved charitable organisations. The amount donated is eligible for deductions up to Rs 2 lakh under Section 80G of the Income Tax Act. The deduction amount varies from 50% to 100% of the donated amount, depending on the charitable organisation type.

Donations can be made in cash, by check, or through online transfers. Donors should ensure they receive a receipt from the charitable organisation as proof of the donation. Charitable institutions must be registered with the Income Tax Department to be eligible for tax deductions.

Donations can be made to various institutions, including religious trusts, educational institutions, and hospitals. Donating to charity not only helps reduce tax liability but also supports the development of society. It is a noble gesture that benefits both the donor and the receiver.

13. Home Loan Repayment

Home loan repayment is an effective tax-saving option in India. It can help individuals reduce their tax liability significantly. Under Section 80C of the Income Tax Act, individuals can claim a deduction of up to Rs 1.5 lakh on the principal repayment of their home loan. Additionally, under Section 24 of the Act, individuals can claim a deduction of up to Rs 2 lakh on the interest paid on their home loan in a financial year. This deduction is available under Section 80EEA.

To claim these deductions, individuals must ensure that the home loan is in their name and that they are the primary borrower. Moreover, they must also ensure that the property they have taken the loan is completed and ready for possession. Home loan repayment offers the dual benefit of owning a house and saving taxes. Therefore, it is an attractive option for individuals looking to invest in property while reducing their tax burden.

14. Tuition Fees for Children

Parents can avail of tax-saving benefits by paying tuition fees for their children. The fees must be paid to schools, colleges, or universities for full-time education. The maximum amount that can be claimed as a deduction is Rs 1.5 lakh under Section 80C of the Income Tax Act.

The deduction is available for up to two children, including adopted children. The parent requesting the tax benefit should pay the fees, which must be for the current academic year. The benefit is available for both salaried and self-employed individuals.

It is crucial to acknowledge that the deduction cannot be claimed for other educational expenses like hostel fees, transportation, or examination fees. It is also important to keep the receipts and bills for the fees paid as proof for claiming the deduction during tax filing. By utilizing this tax-saving option, parents can support their children’s education and reduce their income tax burden.

15. Medical Expenses for Parents

Medical expenses incurred for treating parents are eligible for a tax deduction of up to Rs 50,000 in a financial year under Section 80D. Taxpayers can claim up to INR 50,000 per year for medical expenses incurred by their parents, who are senior citizens. The expenses can be claimed for parents’ medical bills, hospitalisation fees, and preventive health check-ups.

Taxpayers, including stepparents and parents-in-law, can claim this deduction for both parents. The deduction is available under Section 80D of the Income Tax Act, 1961. Taxpayers must ensure they have proof of payment for the medical expenses and are not reimbursed by any insurance policy. This deduction can help taxpayers reduce their tax liability and provide relief from taking care of their parent’s medical expenses.

Saving Your Hard-earned Money

In 2024, saving on taxes in India is crucial for individuals. There are several methods available to help reduce the tax burden on individuals. From investing in ELSS mutual funds to PPF accounts, ULIPs, and National Savings Certificates, there are various methods on how to save tax in India apart from 80C that can be employed for tax savings.

These best tax schemes in India for 2024 provide various effective ways to save tax beyond Section 80C. One can benefit from income tax exemption and salary tax savings by investing in tax-saving schemes like the Equity-Linked Savings Scheme (ELSS) or the Public Provident Fund (PPF). Evaluating the options available is essential, and choosing the one that suits your financial goals and risk appetite.

By making informed decisions and taking advantage of tax-saving schemes, you can maximize your savings and get the most out of your money. Start planning today and enjoy the benefits of these salary-tax-saving options in the coming year.

Want to explore helpful techniques to save and grow your hard earned money? Dive in to our guide on Save Money.

Frequently Asked Questions (FAQ’s)

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