One of the most common queries from salaried workers looking to legally lower their tax burden is How to Save Tax on a Salary Up to ₹10 Lakhs. You can greatly reduce your tax liability and raise your take-home pay with careful planning and the appropriate use of deductions and exemptions.
If your annual income is up to ₹10 lakhs, this guide will help you understand practical, legal, and effective tax-saving strategies that actually work under Indian income tax laws.
Understand Your Tax Regime First
Before planning tax savings, you must choose between:
🔹 Old Tax Regime
- Allows deductions and exemptions
- Better for people who invest and claim benefits
🔹 New Tax Regime
- Lower tax rates
- Very limited deductions
👉 For most salaried employees earning up to ₹10 lakhs, the Old Tax Regime usually offers better tax savings if deductions are properly used.
How to Save Tax on A Salary Up to ₹10 Lakhs
If your annual salary is up to ₹10 lakhs, smart tax planning can significantly reduce your tax liability. You can save tax by claiming the standard deduction, investing in Section 80C options like PPF, EPF, ELSS, and life insurance (up to ₹1.5 lakhs), and using Section 80D for health insurance premiums.
Additionally, salaried individuals can benefit from HRA exemptions, NPS contributions under Section 80CCD(1B) (extra ₹50,000 deduction), and tax-free allowances such as LTA. Choosing the right tax regime (old vs new) based on your deductions can help you legally minimize taxes and maximize take-home salary.
1. Claim Standard Deduction (₹50,000)
Every salaried employee is eligible for a standard deduction of ₹50,000.
Example:
Salary: ₹10,00,000
After standard deduction: ₹9,50,000
No investment proof is required.
2. Use Section 80C (Up to ₹1.5 Lakhs)
Section 80C is the most popular tax-saving section.
Eligible Investments:
- EPF (Employee Provident Fund)
- PPF (Public Provident Fund)
- ELSS Mutual Funds
- Life Insurance Premium
- NSC
- Home loan principal repayment
- Tuition fees (up to 2 children)
Maximum deduction allowed: ₹1,50,000
3. Save More with Section 80CCD(1B) – NPS
By investing in the National Pension System (NPS), you can claim an additional ₹50,000 deduction.
✔ Over and above 80C
✔ Ideal for long-term retirement planning
Total tax benefit from 80C + NPS: ₹200,000
4. Claim House Rent Allowance (HRA)
If you live in a rented house and receive HRA, you can claim an exemption based on:
- Salary
- Rent paid
- City of residence
⚠ If you don’t receive HRA, you can still claim a deduction under Section 80GG.
5. Health Insurance Premium – Section 80D
Medical insurance not only protects your health but also saves tax.
Deduction Limits:
- Self + family: up to ₹25,000
- Parents (senior citizens): up to ₹50,000
Total possible deduction: ₹75,000
6. Home Loan Tax Benefits
If you have a home loan:
- Section 24(b):
- Interest deduction up to ₹2,00,000
- Section 80C:
- Principal repayment up to ₹1,50,000
This is one of the biggest tax-saving tools for salaried employees.
7. Leave Travel Allowance (LTA)
You can claim LTA for travel expenses (within India only).
✔ Covers travel fare
✔ Can be claimed twice in a block of 4 years
✘ Does not cover hotel or food expenses
8. Tax-Free Allowances to Use
Certain allowances are partially or fully exempt:
- Mobile reimbursement
- Meal coupons
- Books and periodicals allowance
- Uniform allowance
Using these smartly reduces taxable salary.
9. Education Loan Interest – Section 80E
If you are paying interest on an education loan:
- Full interest amount is deductible
- No upper limit
- Available for up to 8 years
Example: Tax Saving on ₹10 Lakh Salary
| Particulars | Amount (₹) |
|---|---|
| Gross Salary | 1,000,000 |
| Standard Deduction | -50,000 |
| 80C | -150,000 |
| NPS (80CCD 1B) | -50,000 |
| Health Insurance (80D) | -25,000 |
| Taxable Income | 725,000 |
👉 This can reduce your tax liability significantly compared to no planning.
Old vs New Tax Regime – Which is Better?
- If you claim deductions, the Old Regime is better.
- If you don’t invest or claim exemptions, the New Regime may suit you.
👉 Always calculate both before filing your return.
Final Tips to Save Tax Efficiently
✅ Start tax planning at the beginning of the year
✅ Keep investment proofs ready
✅ Avoid last-minute tax-saving mistakes
✅ File your return accurately and on time
Need Help Filing Your Tax Return?
Understanding how to save tax on salary up to ₹10 lakhs can help you legally reduce your tax burden and build wealth over time. Early planning, smart investments, and correct filing make a huge difference.
👉 Visit efilingpartner.com for expert assistance with income tax e-filing and tax planning.
