Tax Saving Tips for Government Employees’ Income (FY 2024-25)

Expenses are planned after ensuring the earnings. One must also know the amount which will be levied by the government in the name of tax. The write-up highlights some key pointers for salaried employees according to which they can ensure their exact tax outgo.

With a Gross Income of Less than Rs. 5 Lakhs

As per the recently introduced amendments, employees whose yearly aggregate is less than Rs. 5 Lakhs can avail of zero tax benefits and claim a rebate of all the taxable income under section 87A in Assessment Year 2025-26. Gross Total Income includes income from salaries, income from property, LTCG, interest from banks and other sources.

Read Also: Tax Clarification in Case of Income upto INR 5 Lakh

It is even beneficial for you to deposit your money in a bank or co-operative society as the yearly interest on such deposits is less than Rs. 40,000 which means no TDS deducted from banks on such accounts.

Deductions on Property Occupied

Under section 24B of the IT Act, you can avail of a deduction of Rs. 2 Lakhs on the interest for a House loan which will be self-occupied. You can even avail of a joint housing loan with your spouse so that you both can get the deductions of 2 Lakhs each on loan interest. 

Recommended: Income Tax Benefits on Housing Loans in India

As mentioned in Section 8EEA, the deduction on the interest for the Residential property loan is increased to Rs. 1,50,000 which earlier was Rs. 50,000 only. The loan should be taken from 01-04-2019 to 31-03-2020.

National Pension Scheme

On closing or opting out of the NPS, 60% of the corpus paid by the NPS trust is tax-exempt. One must contribute 14% of their monthly salaries to NPS to avail high benefits at the time of receiving the lump sum. Even if you do not match the criterion of the NPS scheme, you can opt for NPS in Banks or Post Offices.

Accuracy in Tax Compliance

Make sure you comply with each and every policy of the tax governance while filing returns to avoid penalties or any futile scrutiny by the tax officers. Returns filed must be concrete and not doubtful.

Bring into practice the use of e-filing and Electronic Payment Modes for smooth and speedy tax compliance.

Use your PAN or Adhaar Card as proof while deducting TDS. No PAN or Adhaar will invite 20% TDS instead of 5%. Link your PAN with your Aadhaar Card.

Lower Taxable Income Via Sections of the IT Act

You can further lower your taxable income by availing the following deductions from your Gross Total Income (mentioned in Chapter VIA of the Income Tax Act)

Section 80C – Deduction on the payment of the LIC premium under the name of self, spouse, son, or daughter is up to Rs. 1,50,000. The deduction depends upon the nature of the policy adopted by the LIC premium payer. No deduction on the LIC premium is decided for persons except the ones mentioned above. Other deductions covered under section 80C are tuition fees, contributions to GIS, SLI and Government Provident Fund.

Under section 80CCD, an additional deduction of Rs. 50,000 is available except for Rs. 1,50,000  for the benefit of an assessee. Hence making the sum of deduction reach up to Rs. 200,000.

Section 80D – Individuals or HUF can claim deductions on health insurance taken by them. 

For Health Insurance, the structure is as follows:

• i. Self and family (Including Senior Citizen)-Maximum Rs.50,000
• ii. Parents –Maximum Rs. 25,000
• iii. Parents (Senior) –Maximum-50,000
• iv. Self and Family including Parents –Maximum Rs. 50,000
• v. Self and Family including Senior citizen Parents –Maximum Rs. 75,000.

For Medical Expenditure, the structure is as follows:

• I.  Self and family (Senior Citizen)-Maximum Rs.50,000
• ii. Parents (Senior) –Maximum Rs.50,000
• iii. Self and Family including Parents –Maximum Rs. 50,000.

To be noted: Payment through cash is not accepted under sec 80D.

Section 80GGC – Mentioned in the section are deductions on contributions done by any citizen to Political Parties or Electoral Trusts. The person can be anyone except local authority or any other judicial person who is partially or fully funded by the government. The total income of people contributing is eligible for deductions. 

Note: 

Contribution in the form of cash will be barred from any deductions.

Refer IT official portal for details regarding Donations:

• a. Without qualifying Limit -100%
• b. Without qualifying Limit- 50%
• c. With qualifying Limit -100%
• d. With qualifying  Limit-50%

Section 80TTA – Interest on savings account from any Bank, co-operative society or Post Office is eligible for deductions up to Rs. 10,000. The deduction can be availed by any individual or HUF. 

Section 80TTB – The government offers a good sum of benefits for senior citizens above the age of 60 years. The person can claim a deduction of up to Rs. 50,000 on the interest from deposits in banks, cooperative societies and post offices.  

Section 80U – Deductions for persons with any disability. The maximum deductible amount on disability is Rs. 75,000 and on severe disability is Rs. 1,25,000 respectively. 

Income Tax Slab Rates as Per FY 2024-25

A.Rates as per Part III First Schedule to the Finance Act 2018

Upto Rs. 250,000	Nil
Rs. 250,001 to Rs. 500,000	5 per cent
Rs. 500,001 to Rs. 10,00,000	20 per cent
Above Rs. 10,00,000	30 per cent

B. For an individual of age 60 years or more but less than 80 years

Up to Rs. 300,000	Nil
Rs.300,001 to Rs. 500,000	5 per cent
Rs. 500,001 to Rs. 10,00,000	20 per cent
Above Rs. 10,00,000	30 per cent