Tax Deduction for Salaried Employees: Know the benefits and in which tax regime and where will you get exemption

As a salaried employee, there are several tax deductions and exemptions that you can claim to lower your taxable income and reduce your overall tax liability. Here are some of the most common tax deductions and exemptions available to salaried employees:

1. Standard deduction: The standard deduction is a fixed amount of Rs. 50,000 that can be claimed by all salaried employees regardless of their actual expenses. This deduction is available under both the old tax regime (where you can claim deductions and exemptions) and the new tax regime (where you cannot claim any deductions or exemptions, but pay tax at lower rates).

2. House Rent Allowance (HRA): If you receive HRA as part of your salary, you can claim a deduction on the rent paid for the house you live in. The deduction is calculated based on the actual HRA received, the rent paid and the location of the house. You can claim this deduction under both the old and new tax regimes.

3. Leave Travel Allowance (LTA): LTA is a tax-free allowance provided by employers to employees to cover their travel expenses during their vacation. You can claim a deduction for the actual amount spent on travel under LTA. However, you can only claim this deduction for two trips in a block of four years. This deduction is available only under the old tax regime.

4. Medical Allowance: This is a fixed amount paid by the employer to cover medical expenses. You can claim a deduction for the actual amount spent on medical expenses up to a limit of Rs. 15,000 per year. This deduction is available only under the old tax regime.

5. Professional Tax: Professional tax is a tax levied by some state governments on salaried employees. This tax can be claimed as a deduction under both the old and new tax regimes.

6. Deductions under Section 80C: Under Section 80C of the Income Tax Act, you can claim a deduction for investments made in certain financial instruments such as Employee Provident Fund (EPF), Public Provident Fund (PPF), National Savings Certificate (NSC), etc. You can claim a deduction of up to Rs. 1.5 lakh under this section. This deduction is available under both the old and new tax regimes.

It is important to note that the availability of tax deductions and exemptions may vary depending on the tax regime you choose to follow. While the old tax regime allows you to claim various deductions and exemptions, the new tax regime provides lower tax rates but does not allow any deductions or exemptions. It is advisable to consult a tax expert to understand the tax implications of your income and investments and choose the tax regime that best suits your financial goals.