How to Save TDS on Salary in India?
How to Save TDS on Salary in India?
Smart Tax Planning Tips for FY 2024–25 | AY 2025–26
If you’re a salaried employee, you’ve probably seen a chunk of your monthly income being deducted as TDS (Tax Deducted at Source). While TDS is mandatory, the amount can be minimized with proper tax planning.
So, the big question is:
“How can I save TDS on my salary legally and smartly?”
Here’s a complete guide on how to reduce your TDS liability, increase your in-hand salary, and avoid over-deduction.
✅ 1. Choose the Right Tax Regime
From FY 2023–24 onwards, the New Tax Regime is the default option, but:
• New Regime: Lower slab rates, but no deductions allowed (except ₹50,000 standard deduction)
• Old Regime: Higher rates, but full access to exemptions and deductions (80C, 80D, HRA, etc.)
💡 Tip: If you can claim deductions worth ₹3 lakh or more, the Old Regime will likely help you save more TDS.
✅ 2. Declare All Tax-Saving Deductions to HR
Every January or April, your employer asks for investment declarations. Make sure to declare:
| Deduction | Limit | Section |
| Investments (PPF, ELSS, etc.) | ₹1.5 lakh | 80C |
| Health Insurance Premiums | ₹25,000 – ₹50,000 | 80D |
| NPS (additional) | ₹50,000 | 80CCD(1B) |
| Education Loan Interest | No limit | 80E |
| Home Loan Interest | ₹2 lakh | 24(b) |
✅ Submitting proofs before March helps HR adjust monthly TDS and avoid excess deduction.
✅ 3. Restructure Your Salary Components
If possible, talk to HR to include tax-friendly allowances, such as:
• HRA (House Rent Allowance) – claim exemption if you're paying rent
• LTA (Leave Travel Allowance) – claim for 2 trips in 4 years
• Meal coupons or Sodexo – tax-free up to ₹50/day
• Telephone/Internet Reimbursement – tax-exempt if bills submitted
• Education Allowance – ₹100/month per child (up to 2)
✅ 4. Submit Form 12BB
Before the financial year ends, submit Form 12BB to declare:
• HRA rent details
• 80C and 80D investments
• Interest on housing loan
This helps your employer adjust your taxable income accurately and reduce monthly TDS.
✅ 5. Claim HRA If You’re Paying Rent
Even if you’re living with parents and paying them rent, you can claim HRA:
• Rent agreement + rent receipts
• PAN of landlord (if rent > ₹1 lakh/year)
✅ This can substantially reduce taxable salary, especially in metro cities.
✅ 6. Invest in NPS for an Additional ₹50,000 Deduction
Under Section 80CCD(1B), you can invest in NPS Tier 1 and claim an extra ₹50,000 deduction, over and above the ₹1.5 lakh 80C limit.
✅ 7. Declare Home Loan Benefits
If you’ve taken a home loan, you can claim:
• Up to ₹2 lakh on interest paid (Section 24b)
• Principal under Section 80C
• First-time buyer benefits under Section 80EE / 80EEA (conditions apply)
Final Words
Yes, TDS on salary can be legally reduced or optimized by:
• Smart tax planning
• Declaring all eligible deductions
• Choosing the correct tax regime
• Structuring salary efficiently
