Salaried taxpayers could have saved Rs 49,094 in taxes; here's what to avoid, note during tax filing

If you're a salaried professional in India, chances are you paid more tax than you needed to in FY2024-25. A recent study by 1 Finance revealed that nearly 68% of IT professionals could have saved an average of Rs 49,094 in taxes by adopting better tax strategies. The reason? Many professionals continue to rely on DIY tax filing and make critical mistakes in tax planning.

Many IT professionals tend to receive high compensation packages, yet when it comes to tax planning, a significant number opt for a do-it-yourself approach. This often involves relying on limited information, sticking to the default tax regime, or making impulsive decisions at the last minute. 

Unfortunately, this approach can result in missed deductions, incorrect tax regime selections, and unnecessary tax payments. To gauge the prevalence of these inefficiencies, 1 Finance conducted a study on the tax profiles of 1,865 IT professionals for the fiscal year FY 2024-25.

One of the main causes for these missed savings is choosing the wrong tax regime. The study found that 33% of professionals ended up selecting the wrong regime. Among them, 86% should have shifted from the old tax regime to the new one, while 14% would have been better off with the old regime. This highlights how important it is to compare both options and estimate potential deductions before making a final decision.

In addition to the tax regime issue, many professionals are overlooking tax-saving opportunities like Corporate NPS. A large portion of employees are unaware of its benefits or hesitate due to concerns about the long lock-in period, which results in missed opportunities for tax-saving.

DIY tax planning also leads to significant compliance gaps. For example, 4% of professionals failed to deduct TDS on rent exceeding Rs 50,000 per month, which could result in penalties, while 13% neglected to pay advance tax on time, incurring interest charges. Additionally, with 31% having multiple income streams, mistakes in choosing the correct ITR form are common, leading to further complications.

Top highlights for salaried professionals:

One of the most common mistakes taxpayers make is choosing the wrong ITR form. The Central Board of Direct Taxes (CBDT) has recently released the seven Income Tax Return (ITR) forms for the assessment year 2025-26, which include key updates to capital gains reporting rules.

The new ITR forms for AY 2025-26 introduce several important changes:

Revised LTCG tax rates: A new 12.5% tax rate under Sections 112 and 112A for transfers made after July 23, 2024.

Aadhaar Enrolment ID: This will no longer be accepted for verification.

Detailed disclosures: New sections for opting out of the new tax regime and for income under the cruise shipping presumptive scheme.

Taxpayers should note the tax savings, deductions they have opted for. If they choose the Old Tax Regime, there are many deductions and exemptions available. However, New Tax Regime also have a number of exemptions and deductions. While filing tax returns, taxpayers should calculate tax outgo after considering these options.  

Like, about 80% IT professionals missed out on the tax-saving benefits of Corporate NPS, largely due to a lack of awareness and concerns about the long lock-in period. This is a key tax-saving opportunity that remains underutilised.

DIY tax filing often leads to critical compliance errors, such as failure to deduct TDS on rent above Rs 50K/month, missing advance tax payments, or incorrectly filing ITR for multiple income streams. These mistakes can lead to penalties and interest charges.

Taxpayers often overlook minor income sources, such as interest from savings accounts, assuming they are exempt. However, it’s essential to review all income and verify the information before filing.

Before submitting your return, make sure to cross-check the pre-filled details with your own records. Even small mistakes can lead to tax notices, delays in refunds, or additional liabilities.