Income Tax Saving Checklist (FY 2025–26): Smart Planning Guide for Salaried & Business Taxpayers

Saving income tax is not about last-minute investments in March — it’s about planned financial decisions throughout the year. Whether you are salaried, self-employed, or running a business, this Income Tax Saving Checklist will help you legally reduce your tax liability and maximize deductions under the Income Tax Act, 1961.

Let’s break it down in a practical, easy-to-follow format.

✅ Step 1: Choose the Right Tax Regime

Before planning investments, decide between:

• Old Tax Regime (allows deductions and exemptions)

• New Tax Regime (lower tax rates but limited deductions)

✔ If you invest in PPF, LIC, ELSS, pay home loan interest, etc., the Old Regime may be beneficial.
✔ If you prefer simplicity and fewer investments, the New Regime might work better.

👉 Always calculate tax under both regimes before filing.

✅ Step 2: Section 80C – Maximum ₹1.5 Lakh Deduction

This is the most popular tax-saving section.

Eligible Investments:

• Public Provident Fund (PPF)

• ELSS Mutual Funds

• Life Insurance Premium

• 5-Year Tax Saving FD

• National Savings Certificate (NSC)

• Employee Provident Fund (EPF)

• Children’s Tuition Fees

• Principal repayment of Home Loan

📌 Checklist Tip:
Invest early in the financial year instead of waiting till March.

✅ Step 3: Section 80D – Health Insurance Deduction

You can claim deduction for medical insurance premiums.

✔ Preventive health check-up up to ₹5,000 included
✔ Payment must be made via non-cash mode (except check-ups)

✅ Step 4: Home Loan Benefits

If you have a housing loan:

• Section 24(b) → Interest deduction up to ₹2 lakh

• Section 80C → Principal repayment eligible

• Section 80EE/80EEA → Additional benefits (subject to conditions)

📌 Self-occupied and rented properties have different tax treatments.

✅ Step 5: NPS – Extra ₹50,000 Deduction

Under Section 80CCD(1B), you can claim an additional ₹50,000 deduction by investing in:

• National Pension System (NPS)

This is over and above 80C limit of ₹1.5 lakh.

✅ Step 6: HRA & Rent Paid

If salaried and receiving HRA:

• Claim exemption based on:

  • Basic salary

  • HRA received

  • Rent paid

  • City of residence (Metro/Non-metro)

✔ Even without HRA, deduction under Section 80GG may be available.

✅ Step 7: Education Loan – Section 80E

• 100% interest deduction

• No upper limit

• Available for 8 years

• Applicable for higher education loan

✅ Step 8: Donations – Section 80G

• Donations to eligible charitable institutions

• 50% or 100% deduction (with/without limit)

• Must be made through banking mode

✅ Step 9: Capital Gains Planning

If you sold property, shares, or mutual funds:

• Use Section 54 (invest in new house)

• Section 54EC (capital gain bonds)

• Harvest long-term capital losses to offset gains

✅ Step 10: Salary Structure Optimization

For salaried employees, optimize:

• Standard Deduction

• Leave Travel Allowance (LTA)

• Food Coupons

• Conveyance benefits

• Employer NPS contribution

• Gratuity & Leave Encashment exemptions

📌 Year-End Income Tax Saving Checklist (Quick Summary)

✔ Compare Old vs New Tax Regime
✔ Invest ₹1.5 lakh under 80C
✔ Invest ₹50,000 in NPS
✔ Take Health Insurance
✔ Check Home Loan deductions
✔ Claim HRA correctly
✔ Claim education loan interest
✔ Donate strategically
✔ Plan capital gains
✔ Submit investment proofs on time

⚠ Common Mistakes to Avoid

❌ Investing only for tax saving (without financial goal)
❌ Ignoring health insurance
❌ Forgetting additional NPS deduction
❌ Not comparing tax regimes
❌ Last-minute March investments

💡 Final Advice

Tax saving should align with your financial goals, retirement planning, and risk appetite — not just deduction limits.

Start early, review quarterly, and consult a tax advisor if required.