5 Lesser-Known Tax-Saving Tips You Need to Know in 2025!

When it comes to tax savings, a few things are known to everyone, like 80C investments, PPF (Public Provident Fund), ELSS (Equity Linked Savings Scheme), HRA (House Rent Allowance) or Home Loan Interest. But there are a few tax-saving tips that not many people know.

In this blog, we’ll talk about five tax-saving tips. These tips will help not just employees but also business owners and freelancers save tax in a legal way.

So, without wasting our precious time, let’s get started!

Tax-Saving Tip #5: Section 80GG

For people like me who haven’t bought a house yet, their highest living expense is rent. It is good that salaried employees get HRA benefits. But if you’re a salaried employee without HRA or a business owner or freelancer who lives in a rented house and doesn’t have HRA. How can you save tax with this?

There is a section in the Income Tax Act called 80GG for self-employed individuals or those who didn’t get any HRA. According to section 80GG, they can claim income tax exemptions if they live in rented accommodations. There are three conditions, and the least amount among them, you can claim that exemption.

#1: Annual rent paid minus 10% of the total income.

#2: ₹5000/- per month.

#3: 25% of your total income.

The lowest amount out of all three will be your exemption.

For instance:

Annual Income of Pavijot: 5 lakh

Rent: ₹1000/- per month

Condition #1

Rent paid – 10% (Total Income)

₹10,000*12 – 10% of 5 Lakh

₹1,20,000 – ₹50,000 = ₹70,000

Condition #2

₹5000/- per month.

12*₹5000 = ₹60,000

Condition #3

25% of Total Income.

25% of 5 lakh = ₹1,25,000

The least among the three is ₹60,000. So, according to 80GG, Pavijot will get an exemption of ₹60,000. Before claiming the exemption, remember two things.

#1:

You or your spouse or your minor child or HUF (Hindu Undivided Family) of which you’re a member- do not own any residential accommodation at your place where you currently reside, perform duties of the office or employment or carry on business or profession.

#2:

In case you own any residential property at any place for which your income from house property is calculated under applicable sections (as a self-occupied property), no deduction under section 80GG is allowed.

Tax-Saving Tip #4: Section 80D

Most of us know that from our medical insurance, the premium can be claimed as a deduction under 80D. Apart from medical insurance, there is one more component that most people don’t know about. Let’s first understand section 80D.

The table below depicts the 80d deduction limit currently available to an individual taxpayer under different scenarios:

Scenario	Deduction for Health Insurance Premium Under Section 80D	Deduction for Central Government Health Scheme	Deduction for Preventive Health Checkup Under Section 80D	Maximum Deductions Under Section 80D
Self, spouse and dependent children	₹25,000	₹25,000	₹5,000	₹25,000
Self, spouse and dependent children + parents (aged below 60 years)	₹25,000 + ₹25,000 = ₹50,000	₹25,000 + 0 = ₹25,000	₹5,000	₹50,000
Self, spouse and dependent children + Resident parents (aged 60 years or above)	₹25,000 + ₹50,000 = ₹75,000	₹25,000 + 0 = ₹25,000	₹5,000	₹75,000
Self, spouse, dependent children (any person aged 60 or above and Resident) + Resident parents (aged 60 years or above)	₹50,000 + ₹50,000 = ₹1,00,000	₹50,000 + 0 = ₹50,000	₹5,000	₹1,00,000
Members of Hindu Undivided Family (HUF)	₹25,000	NIL	NIL	₹25,000
Members of Hindu Undivided Family (HUF) (aged 60 years or above and Resident)	₹50,000	NIL	NIL	₹50,000

If you or your family, i.e., your wife and child, take medical insurance, and if you’re below 60 years of age, then you can claim an annual deduction of ₹25,000. If you also pay your parent’s premium, then ₹25,000 more is added. If your parents are senior citizens, this limit will increase from ₹25,000 to ₹50,000.

When you refer to section 80D, you’ll find another component, i.e., preventive health check-ups. This means if you, your spouse, child, or parents get a full-body check-up, then you can claim a deduction of ₹5,000.

For taking the 80D benefits, you should remember:

The premium amount should be paid through a bank transfer, i.e., through a check or net banking.
The preventive health check-up can be paid with cash.

Tax-Saving Tip #3: Section 80CCD (1B)

You must know that by adding section 80C + section 80CCC + section 80CCD (1), you can claim a total deduction of ₹1.5 lakhs that you get by investing in PPF, ELSS, etc. Still, many people don’t know you can get an additional ₹50,000 deduction through section 80SSD (1B). You can get this by investing in NPS (National Pension System).

If you’re investing in NPS, you’ll get this deduction only if you’ve tier 1 accounts with lock-in periods up to age 60. If you invest in the tier 2 account under NPS, then it is not eligible for deductions.

Tax-Saving Tip #2: Tax Harvesting

Before 2018, there was no tax on long-term capital gains. When the govt. introduced GST, they gave a small benefit. Capital gains up to ₹1 lakh are tax-free. But most of us cannot use this ₹1 lakh limit because, in India, tax is on Realised Profit. Your portfolio could be highly profit-making, and you fulfill the long-term capital gain condition for 12 months. But you haven’t sold your shares or mutual funds yet, and the profit has not been realised.

So, your ₹1 lakh limit for the year is wasted. The method of using that limit is Tax Harvesting. Let’s understand this with an example:

	Pavijot	Megha
Pre-Tax Gains	₹3.0 L	₹3.0 L
Taxable Gains (Minus 1L exempt)	₹2.0 L	NIL
LTCG Tax @10%	₹0.2 L	NIL
In-Hand Gains	₹2.8 L	₹3.0 L

Imagine Pavijot is holding all his stocks, and after 3 years, he has an LTCG (Long Term Capital Gain) of ₹3 lakh. After subtracting ₹1 lakh, he will have to pay ₹20,000 as 10% tax on the remaining ₹2 lakh. Meanwhile, Megha sold her profit shares yearly and immediately bought them from the market again. This way, every year, her LTCG was realised. By the third year, she made a ₹3 lakh profit, but her tax was 0.

Tax-Saving Tip #1: Carry Forward of Losses

You must be familiar with the two concepts of the Income Tax Act: Set Off and Carry Forward of Losses.

Set Off means that, during any year, if you had a business or capital loss, you can do a set-off against the business profit or capital gain, which means they will cancel out. There are a few conditions in this:

Long Term Capital Loss can be set off only against Long Term Capital Gains.
Short Term Capital Losses are allowed to be set off against both Long Term Gains and Short Term Gains.
Business loss can be set off only against business income.

Carry Forward of Losses means that, you can carry forward your losses from one year to another for set off.

You’re at a loss if you don’t make any profit in the year. Then how would you set off your loss against? In this case, Income Tax gives you a relaxation to carry forward the loss for eight years. For instance:

Year	Profit/Loss	Net Gains
2024	₹1.0 L	₹1.0 L
2025	₹1.0 L + ₹0.5 L	₹0.5 L
2026	₹0.5 L + ₹1.0 L	₹0.5 L
Taxable Gains		₹0.5 L

The ₹1 lakh loss this year will carry forward to next year. If you have a ₹50,000 profit next year, then this ₹50,000 will be cancelled. Another ₹50,000 loss will remain and will carry forward to next year. If you have a profit of ₹1 lakh next year, then after setting off the ₹50,000 loss, you have to pay tax only on the remaining ₹50,000 gain.

End Note!

The essential condition you must know is that filling out an income tax return is necessary. You can’t carry forward your losses if you don’t file a return. Hope this post is useful for you!

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