In order to save salary from the onslaught of the income tax, the employees must make certain investments. According to the Income Tax Act, 1961, there are various ways in which income tax on salary can be exempted:

  1. Donations to Charitable Institutions are exempted from income tax.
  2. INR 15,000 can be deducted every year for health insurance premium payment. For the senior citizens, INR 20,000 is the deduction.
  3. According to Section 10 (14) Rule 2BB(10), in companies that grant its employees transport allowance, up to INR 800 per month can be deducted from the employees’ income tax.
  4. According to Section 17(2), the employees can claim an exemption of a maximum of INR 15,000 on a yearly basis on the expenditure that has been incurred on the medical treatment of the dependent or the employee himself/herself.
  5. Section 24 states employees paying interest on housing loans will get up to INR 150,000 deducted from the taxable income of the employees.
  6. The taxpayers can claim for deduction on the amount of interest paid on educational loans.
  7. According to Section 80C, salaried people can save up to INR 100,000 if they make investments or purchases of the following instruments:
  8. Equity-Linked Savings Schemes
  9. Premium for Life Insurance
  10. Infrastructure Bonds
  11. Provident Fund (PF) Contribution
  12. Tax Saving Fixed Deposits