Your Take-Home Can Be ₹20K–1L Higher With the Right Strategy
Two employees with the exact same CTC can have very different take-home salaries; sometimes a gap of ₹20,000 to ₹1 lakh per year. Why? One chose the wrong tax regime. Another didn't claim HRA. A third invested in 80C but never declared it to the employer. Maximising your take-home is not about cutting corners: it's legal tax optimisation: using the right regime, claiming 80C and 80D fully, optimising HRA exemption, and structuring your salary for tax efficiency, all while staying fully compliant with income tax laws. This guide gives you practical, step-by-step strategies that salaried employees in India can use to legitimately increase their in-hand salary. Every strategy here is legal, proven, and used by smart professionals.
Key Takeaways
- Regime choice: Old vs New can change tax by ₹20K–1L+. Compare with a calculator
- 80C (₹1.5L): Use fully via EPF, ELSS, PPF. Saves up to ₹45K tax at 30% slab
- 80D: Health insurance for self + parents. Saves up to ₹22.5K tax
- HRA: Submit rent receipts. Exemption can save ₹30–80K depending on rent and basic
- Structure: Discuss basic vs HRA vs allowances with HR. Optimise for your situation
Strategy 1: Choose the Tax Regime That Saves More
India offers two tax regimes (Old and New), and you can switch every financial year. The Old Regime allows deductions under 80C (₹1.5L), 80D (₹25K–75K), HRA, LTA, home loan interest, and more, but has higher slab rates. The New Regime has lower slab rates and a ₹75,000 standard deduction but removes almost all other deductions. Run both regimes with your actual income, 80C, 80D, HRA, and other deductions. Old Regime typically wins when total deductions exceed ₹2.5–3 lakhs. New Regime wins for simpler situations with minimal investments. The difference can be ₹15,000–1,00,000 or more per year. Declare your choice to your employer at the start of the year. Re-evaluate every April; your situation may change.
Strategy 2: Utilise Section 80C Fully (₹1.5L)
- EPF: Automatic if employed. Employer + employee PF count. Often covers a large part of ₹1.5L.
- ELSS: Equity-linked, 3-year lock-in. Good for growth + tax. SIP or lump sum.
- PPF: Safe, 15-year. Tax-free returns. Contribute before April 5 for that year's interest.
- LIC, NSC, 5-yr FD: Suit conservative investors. Ensure you need the product, not just tax.
- Home loan principal: Counts under 80C. If you have a loan, this helps.
- At 30% slab, ₹1.5L in 80C saves ₹45,000 tax. Plan early in FY.
Strategy 3: Claim Section 80D
- Self + family: Up to ₹25,000 for health insurance. Parents (below 60): extra ₹25,000.
- Parents 60+: Up to ₹50,000 for their insurance. Total 80D can be ₹75,000.
- Preventive check-up: ₹5,000 within the limit.
- Keep premium receipts. Employer insurance usually doesn't qualify; personal policy does. Saves up to ₹22.5K at 30% slab.
Strategy 4: Maximise HRA Exemption
How to maximise HRA exemption
To maximise: pay rent, get valid receipt and agreement, declare to employer. Living with parents usually means no HRA. Higher basic increases the 10% component, so exemption may be lower; structure matters. Submit rent receipts on time.
Strategy 5: Optimise Salary Structure with HR
- HRA vs basic: If you pay rent, adequate HRA helps. Too high HRA without rent is not useful.
- Tax-free reimbursements: Medical, LTA, books—claim against bills if policy allows.
- Food/meal allowance: Some employers offer tax-free component. Check policy.
- Timing: Structure changes often at joining or during revision. Mid-year changes may be limited.
Strategy 6: Declare Investments and Submit Proofs
Under-declaration leads to excess TDS. Declare estimated 80C, 80D, HRA at the start of the year. Submit proofs (LIC receipt, ELSS statement, rent receipt, premium receipt) by employer deadline. This reduces monthly TDS and avoids a large refund or tax outgo at year-end. Keep copies of all documents.
Strategy 7: Plan Home Loan (If Applicable)
- Interest (Section 24): Up to ₹2L deduction. Old Regime only.
- Principal (80C): Up to ₹1.5L. Shares limit with EPF, ELSS, etc.
- 80EEA: First-time buyers—additional interest deduction. Check eligibility.
- Home loan benefits apply in Old Regime. Factor into regime choice.
Strategy 8: Avoid Common Leaks
- Wrong regime: Not comparing both can cost ₹20K–50K.
- Missing 80C/80D: Invest but don't claim—same tax as not investing.
- HRA not claimed: Pay rent but don't submit proof—lose exemption.
- Late proof submission: Excess TDS deducted; refund delayed.
- No declaration to employer: TDS based on full income—excess deduction.
Practical Action Plan
- April: Compare Old vs New regime with Tax Regime Calculator. Declare choice to employer.
- April–June: Plan 80C and 80D investments for the year. Start SIP in ELSS if using.
- Ongoing: Submit rent receipts for HRA within employer deadline. Submit 80C/80D proofs.
- January–February: Review declaration. Adjust if investments differ from plan.
- Every salary revision: Re-run In-Hand Calculator. Discuss structure with HR.
Use Our Tools
Use our Tax Regime Calculator to compare Old vs New with your numbers. Use the In-Hand Salary Calculator to see the impact of each deduction on your take-home. Run these at the start of every financial year and whenever your salary or investments change.
Disclaimer
All strategies are for legal tax optimisation. Tax laws change. Consult a chartered accountant for personalised advice based on your specific income and investments.