Income Tax Filing for Salaried Individuals : Every year, as the tax season approaches, salaried employees across India scramble to gather documents, understand deductions, and meet deadlines. Whether you are filing your return for the first time or are a seasoned taxpayer, understanding the nuances of income tax filing can help you stay compliant, minimise your tax liability legally, and avoid the stress of last-minute submissions.
This guide has been prepared specifically for salaried individuals and covers everything from understanding your Form 16 to selecting the right tax regime, claiming deductions, and meeting critical deadlines.
Step 1: Understand Your Form 16 — Your Most Important Document
Form 16 is the Tax Deduction at Source (TDS) certificate issued by your employer. It has two parts: Part A, which contains details of tax deducted and deposited with the government, and Part B, which provides a detailed breakup of your salary and deductions claimed. Before filing, verify that the figures in Form 16 match your payslips and investment proofs submitted to your employer.
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Step 2: Choose Between the Old and New Tax Regime Wisely
Since FY 2023–24, the New Tax Regime has become the default for salaried individuals. However, taxpayers retain the option to opt for the Old Tax Regime, which allows a wider range of deductions and exemptions. The right choice depends on your income level, investments, and eligible deductions.
Under the Old Tax Regime, you can claim deductions such as Section 80C (up to ₹1.5 lakh), HRA exemption, standard deduction of ₹50,000, LTA, and interest on housing loans under Section 24(b). Under the New Tax Regime, most exemptions are unavailable, but tax rates are lower and a standard deduction of ₹75,000 applies from FY 2024–25 onwards.
Step 3: Claim All Eligible Deductions Under the Old Regime
Many salaried individuals leave significant tax savings on the table by overlooking eligible deductions. A thorough review of all permissible deductions can substantially reduce your taxable income and overall tax liability.
- Section 80C (up to ₹1.5 lakh): EPF contributions, PPF, ELSS mutual funds, life insurance premiums, NSC, home loan principal repayment, children’s tuition fees
- Section 80D: Health insurance premiums — up to ₹25,000 for self and family; ₹50,000 for senior citizen parents
- Section 24(b): Interest on housing loan — up to ₹2 lakh for self-occupied property
- Section 80E: Interest on education loan for higher studies (no upper limit)
- Section 80TTA / 80TTB: Interest income from savings account — ₹10,000 limit (₹50,000 for senior citizens)
- HRA Exemption: If you receive House Rent Allowance, exemption can be claimed based on actual rent paid, subject to prescribed limits
- Leave Travel Allowance (LTA): Reimbursement for domestic travel within India — claimable for two journeys in a block of four years
- Standard Deduction: A flat ₹50,000 deduction from salary income — no documentation required
Which ITR form should a salaried individual file for AY 2025–26?
Most salaried individuals should file ITR-1 (Sahaj) if their total income is up to ₹50 lakh and comes only from salary, one house property, and interest income. However, if you have capital gains from mutual funds or shares, more than one house property, or income exceeding ₹50 lakh, you must file ITR-2 instead. Filing the wrong form can result in a defective return notice from the Income Tax Department.