Every March, the same story repeats. I open YouTube and search: “How to save tax?”
Soon, I'm watching five different videos giving five different strategies. One suggests ELSS, another pushes insurance, and yet another is throwing formulas like a coaching class. By the end, I’m more confused than when I started.
So this year, I tried something different. I opened an AI assistant and typed a simple prompt: "My CTC is ₹15,00,000. Can you help me save tax for FY 2024–25?"
The result? A clear, personalised roadmap I could actually use.
Nothing unusual — just a typical mid-level salaried setup:
Basic salary: ₹6,00,000
House Rent Allowance (HRA): ₹3,00,000
Special allowance: ₹3,00,000
Performance bonus: ₹2,00,000
Employer PF contribution: ₹72,000
Like many, I assumed this was already tax-efficient. But after digging deeper, I found room for improvement.
The tool asked a few key questions:
Do you live on rent? → Yes
Rent amount? → ₹25,000/month
City? → Bengaluru (classified as a metro)
HRA exemption is calculated as the least of the following:
Actual HRA received = ₹3,00,000
50% of basic salary (for metro) = ₹3,00,000
Rent paid – 10% of basic = ₹3,00,000 – ₹60,000 = ₹2,40,000
HRA exempted = ₹2,40,000
Only ₹60,000 is taxable.
Earlier, I was mistakenly paying tax on the full ₹3 lakh. This fix alone made a big difference.
The assistant nudged me to revisit basic exemptions and deductions under Sections 80C, 80D, and 80G:
Deduction type
Standard Deduction: ₹50,000
Employee PF (12% of Basic): ₹72,000
Term Insurance Premium: ₹20,000
Health Insurance Premium (80D): ₹25,000
NGO Donations (80G): ₹10,000
Tip: You can also include these popular 80C options:
PPF (Public Provident Fund)
LIC premium
Home loan principal repayment
Tax-saving ELSS funds
Many of us already invest in these but forget to claim them properly.
The ₹2 lakh annual bonus I receive is fully taxable. The AI suggestion? Restructure it into tax-efficient components.
Possible inclusions (if HR department in your company permits):
Leave Travel Allowance (LTA)
Fuel & driver reimbursement
Books or professional development expenses
Work-from-home allowance
These are all legitimate expense categories. If you already incur these costs, ask HR whether they can be incorporated into your pay structure.
Tip: Not all companies allow this — but it’s worth the conversation.
Here’s how my taxable income compared under both regimes:
Component
Gross Salary: 15,00,000
(-) HRA Exemption: 2,40,000
(-) Standard Deduction: 50,000
(-) 80C (PF + Term Insurance): 92,000
(-) 80D (Health Insurance): 25,000
(-) 80G (Donations): 10,000
Net Taxable Income (Old Regime): ₹10,83,000
Net Taxable Income (New Regime): ₹14,50,000
Approximate tax payable:
Old: ₹1,37,640
New: ₹1,82,500
Choosing the old regime saved me ₹44,860. All through legitimate exemptions and smart structuring — no complicated tricks.
What made the difference wasn’t just the tool — it was asking the right questions:
Have I accounted for all eligible exemptions under 80C?
Am I using 80D and 80G appropriately?
Is my HRA correctly calculated?
Can my variable pay be optimized?
Many salaried individuals miss out on deductions they’re already eligible for, just because they don’t revisit their structure every year.
Recalculate your HRA — don’t pay tax unnecessarily
Use 80C to the max — PF, PPF, ELSS, LIC, home loan
Don’t skip 80D and 80G — health and charity both help
Compare old vs new regimes — one isn't always better
Talk to HR — explore reimbursement options
Start early — don’t leave it for March
Use digital tools or advisors — for cross-checking and clarity
For salaried individuals with simple income structures, it’s possible to plan taxes without waiting till the last moment — or relying entirely on financial influencers.
Whether you use an online calculator, AI assistant, or consult a CA — what matters is being proactive and informed. Because saving tax isn't about loopholes — it’s about knowing the rules and applying them smartly.
(Disclaimer: This article is for educational purposes only and should not be considered tax advice. Tax outcomes vary by individual, and it is recommended to consult a qualified tax advisor for personalized guidance.)
(By arrangement with livemint.com)