Uncommon ways to save income tax in india for fy 2025-26

09/05/24

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Paying tax is one of the many ways we, as citizens, support the Government of India’s goal of transforming India into a highly developed nation. It is through the payment of tax that we can fund developmental aspects like the construction of roads, schools, and hospitals. One could rightly say that tax is the lifeblood or fuel of development. At the same time, we must examine legal solutions for how to save taxes in India. Let us review the many ways taxes can be saved effectively. These solutions have two aspects in common: They entail a long-term investment and effectively reduce our taxable income.

Donate to NGOs and Claim Exemption Under Section 80G

When you donate to NGO, you are not only contributing to a meaningful cause but also reducing your taxes. Any money given to approved non-profit organisations can be deducted from your taxable income, up to 10% of your total earnings. So, if you earn Rs. 5 lakhs, you can reduce your taxable income by up to Rs. 50,000 by giving to charity. Do ensure that you are donating to well-known, reputed, and trusted organisations like Bal Raksha Bharat (Save the Children India). This non-governmental organisation, which has been present in India for over 15 years, has a commendable track record of channelling donations towards strategic and highly impactful initiatives that address various developmental aspects for children across the country.

Eligibility and Deduction Limits

• Donations must be made to NGOs approved under Section 80G of the Income Tax Act
  
• Deduction is allowed at 50% or 100%, depending on the organisation
  
• Maximum deduction is capped at 10% of adjusted gross total income
  
• Donations should be made via non-cash modes such as cheque, UPI, or bank transfer
  
• A valid 80G receipt with PAN details is mandatory
  

These are the most reliable hidden ways to save tax legally.

Make Smart Tax-Saving Investments Under Section 80C

Any financial advisory on the topic of how to save tax in India will undoubtedly recommend investing in tax-saving instruments, which include mutual funds and fixed deposits. These investments, which bring down one’s taxable income, allow savings of up to Rs. 1.5 lakhs per year from being taxed. In addition, they can also earn a sizeable source of investment-based income. However, one must keep in mind that there are specified periods during which the investment cannot be withdrawn. However, this is an effective and time-tested solution to save on taxes.

Popular Options (PPF, ELSS, Fixed Deposits, NPS, etc.)

Some of the most popular income tax saving options under Section 80C include Public Provident Fund (PPF), Equity Linked Savings Schemes (ELSS), tax-saving fixed deposits, National Savings Certificate (NSC), and National Pension System (NPS). Together, these allow deductions of up to ₹1.5 lakh annually. While lock-in periods differ, they help combine long-term wealth creation with effective ways to save income tax.

Buy a Home and Claim Deductions

Investing in home ownership is another way to enjoy the benefit of personal property while also saving on taxes. First, the money you pay toward your home loan’s principal amount can be deducted from your taxable income up to Rs. 1.5 lakhs per year. Additionally, if you rent out your property, you can deduct interest paid on your remaining home loan amount from that rental income when calculating your taxes due.

Principal Deduction Under Section 80C

The principal repayment of a home loan qualifies for tax deduction under Section 80C, subject to the overall limit of ₹1.5 lakh per financial year. This benefit is available only after possession of the house is received. If the property is sold within five years, previously claimed deductions may be reversed, making long-term ownership a smarter tax-saving strategy.

Interest Deduction Under Section 24(b)

Interest paid on a home loan can be claimed as a deduction under Section 24(b). For self-occupied properties, the maximum allowable deduction is ₹2 lakh per year. In the case of rented properties, the full interest amount can be claimed, subject to set-off limits. This remains one of the best ways to save tax in India for salaried individuals.

Pay Health Insurance Premiums – Section 80D

Health insurance premiums paid under Section 80D allow individuals to claim tax deductions for self, family, and parents. This provision supports responsible healthcare planning while offering a practical way to save income tax through legally approved income tax saving options.

Deduction Limits (Self/Family/Senior Citizens)

Under Section 80D, taxpayers can claim up to ₹25,000 for health insurance premiums paid for self, spouse, and dependent children. An additional ₹25,000 can be claimed for parents, which increases to ₹50,000 if parents are senior citizens. Preventive health check-ups up to ₹5,000 are also included within the overall limit.

Claim Leave Travel Allowance (LTA)

Leave Travel Allowance allows salaried individuals to claim tax exemption on travel expenses incurred within India. Eligible costs include airfare, rail fare, or bus fare for personal travel undertaken during approved leave. This benefit can be claimed for limited journeys within a defined period, making it a useful income tax saving option when travel is planned and documented correctly.

Eligible Expenses and Conditions

Leave Travel Allowance (LTA) exemptions apply only to domestic travel undertaken within India. Eligible expenses include airfare, rail fare, or bus fare for the shortest route. Accommodation and food expenses are not covered. LTA can be claimed for two journeys in a block of four years, provided actual travel has taken place and valid proof is submitted.

Take a Loan for an Electric Vehicle – Section 80EEB

Trying to help the environment by driving an electric vehicle? The government wants to reward you for your purchase. Under Section 80EEB, you can claim an income tax exemption of Rs. 1.5 lakhs on interest paid toward an electric vehicle loan. This incentive aims to promote greener transport options. So while saving the planet, you also save some tax!

Claim Double Housing Deductions

If you have to live in a different city for work while your family remains elsewhere, you may qualify for dual housing benefits! You can claim tax deductions for rent paid on your secondary accommodation near work. And you can also claim home loan interest deductions for the home where your family resides! It’s like getting a valuable tax benefit simply for your work situation.

Avail Benefits for Disabilities / Handicap

If you or anyone in your family has certain disabilities, you are eligible for additional income tax exemption. These include a deduction of Rs. 75,000 for yourself if you have a disability, as well as additional exemptions for supporting disabled dependents. While having a disability is challenging, at least there is some financial relief available through these tax provisions.

Save on Education Expenses and Loans (Section 80E)

Are you a good student who loves reading and learning? Then you may be able to convert that passion into income tax deduction! Any fees paid for your education or books and materials can be claimed as deductions from your taxable income. This includes tuition, admission fees, cost of books and publications, and even expenses on stationery items. Who knew doing your homework could make you richer too?

Conclusion

Saving income tax is not about avoiding responsibility, but about smart and lawful planning. By understanding these uncommon yet legal methods, taxpayers can significantly reduce their liability while securing long-term financial stability. From NGO donations and green initiatives to housing, health, and education benefits, these strategies highlight the best ways to save tax in India while contributing positively to society and national development.

FAQ’s

How can I reduce my income tax in India?

You can reduce your income tax by using deductions under Sections 80C, 80D, 80G, 24(b), and 80E. Investing in tax-saving instruments, donating to NGOs, paying health insurance premiums, and claiming home loan benefits are effective income tax-saving options.

How to avoid 30% tax on salary?

To avoid the 30% tax slab, plan your salary using deductions like Section 80C investments, NPS contributions, health insurance under 80D, HRA, and LTA. Choosing the right tax regime and early planning can significantly reduce taxable income.

How to pay 0 tax on a 12 lakh salary?

A ₹12 lakh salary can attract zero tax by fully utilising deductions such as standard deduction, Section 80C, 80D, HRA, and home loan benefits under the old tax regime. Strategic planning helps legally save income tax without penalties.

Can I claim deductions in the new tax regime for FY 2025–26?

The new tax regime offers lower slab rates but allows very limited deductions. Most benefits under Sections 80C, 80D, 80G, and HRA are not available. Taxpayers should compare both regimes before choosing the best way to save tax.

Gaurav Sharma

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“I am an editor and technical specialist at Bal Raksha Bharat, responsible for publishing articles and posts. My role involves evaluating content for consistency, and ensuring a positive user experience across the website."