ITR: Your Ultimate Guide To Saving Tax — Follow These 8 Steps

Filing of income tax returns (ITR) for financial year FY 2024-25 (AY 2025-26) has already started and it’s time to put all your documents together for seamless ITR filing.

If your income in FY25 exceeds the exemption limit, it is mandatory under the Income Tax Act, 1961, to file your return. The ITR filing process includes reporting your entire income from various sources, claiming any applicable deductions, paying any outstanding taxes and submitting your return by the due date. It enables you to receive any necessary refunds, avoid fines and remain in compliance with tax rules.

Saving more on your total income tax liability depends on the tax regime you choose. While the old tax regime offers several deductions, the new tax regime allows only limited deductions, but liberal tax rates. If you have several deductions to claim, choosing the old tax regime could be helpful to save more on your total income tax amount.

Here are eight points to keep in mind to save tax while filing ITR 2025:

1.  Section 80C deductions

Section 80C of the I-T Act permits deductions of up to Rs 1.5 lakh in a financial year for a range of investments. These include Public Provident Fund (PPF), National Savings Certificate (NSC), Employee Provident Fund (EPF), Equity Linked Saving Schemes (ELSS), Home loan principal repayment and Life insurance premiums.

2. Home Loan Interest Deduction

Section 24(b) allows deductions on interest paid towards home loans. Taxpayers can claim benefits of up to Rs 2 lakh in a financial year under this provision. To claim this benefit, the construction or purchase of the property should have been completed within five years from the financial year in which the loan was availed.   

3.  Deductions Under Section 80D  

Section 80D allows deduction on health insurance premiums. You are eligible to claim deductions of up to Rs 25,000 for premiums paid for yourself, your spouse and dependent children. In case of senior citizens, the amount is capped at Rs 50,000.

4.  Utilise Your HRA  

Salaried individuals receiving House Rent Allowance (HRA) can claim deductions on rent paid in a financial year. The taxpayers living in rented accommodations in a metro city can claim deductions for up to 50% of the actual HRA received. For the non-metro cities, the deductions are capped at 40%. 

5.  Take Advantage Of Section 80E

Section 80E allows individuals to claim interest paid on loans taken for higher education. This can be taken for up to 8 years, or until the interest is paid off in full, whichever is first. The best part is that there is no upper limit and the entire interest amount qualifies for tax benefits.

6.  National Pension System (NPS)

Salaried individuals and self-employed taxpayers can claim benefits for NPS contributions under Section 80CCD (1). However, this amount is capped at Rs 1.5 lakh in a financial year under the overall limit of Section 80 CCE. An additional deduction of up to Rs 50,000 is also allowed for the same investment under Section 80 CCD(1B).

7.  Section 80G: Donations  

Section 80G allows for deduction of donations given to designated charitable organisations and relief funds. The tax benefits could be applicable on 50% or 100% of the donation amount, depending on the non-profit organisation.

8.  Section 80TTA and 80TTB: interest on savings accounts

Under Section 80TTA, individual taxpayers under 60 years of age can claim tax benefits on returns of up to Rs 10,000 from their savings accounts in banks and post offices. Section 80TTB allows senior citizens to claim the same benefits for an amount up to Rs 50,000.