The Income Tax Department of India handles taxation of individuals in the country and makes sure that every taxpayer is treated fairly under the Income Tax Act rules and regulations. Income from various sources is treated and taxed differently, as is the case with salaried employees. Salaried Employees receive a fixed amount as salary monthly, quarterly, or annually and get other benefits such as house rent allowances (HRA), Leave Travel Allowances (LTA), Standard Deduction, Interest on Home Loan, Professional Tax, etc. All these allowances and perquisites consist of taxable income, including salary. Paying a huge amount in taxes out of your salary income might be a horrifying experience. However, use professional assistance for tax benefits for salaried employees, and get started with TaxDunia.
New Tax Benefits in the Budget 2025
What are the Tax Benefits for Salaried Employees
The tax benefits to salaried employees are offered in the form of income tax deductions and exemptions on total taxable income. Under several sections of the Income Tax Act, there are legal provisions for these tax benefits. The following are some of such exemptions that a salaried employee can claim while paying taxes
- House Rent Allowance
HRA is either partially or fully exempt from income tax, but there are certain conditions to be met before claims can be made. The salaried individual is living in a rented accommodation if such is not the case, then they have to pay taxes. You can claims
- Total HRA received from your employer
- Rent paid – 10% of basic salary + DA
- 40% of salary (basic salary+ DA) for nonmetro cities and 50% of salary (basic salary+ DA) for metros
- Leave Travel Allowances
Salaried persons can claim LTA to a certain extent, but the expenses covered for shopping, food coverages, entertainment, and leisure cannot be claimed. The person can claim LTA twice in a block of four years under the following conditions
- LTA for domestic travel (not for international travel costs)
- Travel is to be through the shortest route possible, either via railway, air travel, or public transport
- Standard Deductions
For assessment year 2025-26, salaried persons can claim up to Rs 50,000 as standard deductions, and for assessment year 2026-27, the standard deduction would be Rs 75,000.
- Interest on Home Loan
Under section 24 of the IT Act, salaried persons can claim income tax exemption up to Rs 2 lakhs on the interest paid on the home loan. If the property is let out, then the maximum could be Rs 2 lakhs if there is no other source of income, and if the property is self-occupied, and income is derived from salary, then it could also be up to Rs 2 lakhs.
Tax Benefits as Allowable Deductions
- Section 80C
This section of income tax offers a huge deduction from the taxable income to salaried persons. As under section 80C, you can claim up to Rs 1.5 lakhs on investments in EPFs (employees provident fund), NPS (national pension scheme), SSY (sukanya samriddhi yojana), life insurance premium, Section 8 Company Registration etc.
- Section 80D
Salaried persons can claim deductions ranging from Rs 25,000 to Rs 1,00,000 on medical insurance premiums. Age factor and other things also matter while claiming the maximum of deductions. These deductions are in addition to the ones available under section 80C.
- Section 80E
Individuals are eligible to claim deductions on interest on loans taken for the higher education of themselves, their spouses, or their children.
Along with these deductions and exemptions on taxable income, a salaried person can claim a Rs 60,000 rebate under section 87A, which is in addition to the standard deductions of Rs 75,000. Other deductions and benefits are also available, and to learn about the possible scenarios for salary income, reach out to a tax expert. It would become easier to calculate the benefits when getting personalized services.
