Investment Tips For New Employee to Save on Income Taxes

What Are Some Investment Tips for a New Employee to Save on Income Taxes

Smart tax-saving tips for new employees to help reduce income tax, start investing early, and build a strong financial foundation from day one.

Written by : Knowledge Centre Team

2025-10-09

3893 Views

8 minutes read

Exit Pop Up

Live Life More Confidently

Get best insurance from our experts

Name is required Name should be Valid
Mobile Number is required Mobile Number should be Valid
DOB is required DOB should be Valid
Annual Income is required
Please tick to proceed further.

Thank you for your interest in our product. Our financial expert will connect with you shortly to help you choose the best plan.

As a new employee, you must always remember that you have an income tax liability, depending upon your annual salary. As per your annual income, you are categorised into different income tax slabs. You have to file your annual Income Tax Returns (ITRs) on the basis of the tax slabs. But, did you know that prudent investment decisions can save income tax for salaried employees? If you are looking to save tax, you can choose a variety of tax saving investment options, like, insurance and savings instruments.

Before knowing more about the investment options to save income tax for salaried employees, you must understand your income tax category, under the new tax regime for FY 2025-26 (AY 2026-27). You can refer to the chart given below:

Rate

Tax Slab for FY 2025-26

Zero

Up to ₹4 lakh

5%

₹4 lakh to ₹8 lakh

10%

₹8 Lakh to ₹12 lakh

15%

₹12 lakh to ₹ 16 lakh

20%

₹16 lakh to ₹20 lakh

25%

₹20 lakh to ₹24 lakh

30%

₹24 lakh

According to the new budgetary provisions, you can also choose a new tax slab by foregoing standard deductions and exemptions, like deductions under Section 80 C of the Income Tax Act, Leave Travel Allowance (LTA), conveyance allowance, relocation allowance, interest on housing loan etc. for FY 2025-26,  the new tax regime are entitled to a full tax rebate of up to ₹60,000 under Section 87A if their net taxable income does not exceed ₹12,00,000. This results in zero tax liability for taxpayers within this income bracket.

Investment tips for salaried employees

To save income tax for salaried employees, you can choose to invest in:

  1. Life insurance: Life insurance policies provide financial protection to your family in the case of an unfortunate event. Alongside, a life insurance policy will also allow you to save on taxes. You can claim tax exemptions for making premium payments under Section 80C of the Income Tax Act.

  2. Medical Insurance: Having a health policy can also provide tax benefits. You can claim deductions up to Rs 25,000 on a health insurance policy under Section 80D of the Income Tax Act.

  3. Unit Linked Insurance Plans (ULIPs): ULIPs provide the dual benefit of market-linked returns along with the protection of life insurance. Investments under the scheme provide tax benefits under Section 80C.

  4. Equity Linked Savings Schemes (ELSS): These are also known as tax saving mutual fund schemes. ELSS have a minimum lock-in period of 3 years. These instruments invest primarily in equity funds and generate high returns. Investment in ELSS can help save income tax for salaried employees under Section 80C.

  5. Tax Saving Fixed Deposits: As a new employee, you can save tax by investing in tax saving fixed deposits, which have a lock-in period of 5 years. Along with high interest payouts, these investments also allow tax savings.

  6. Post office time deposits: 5-year POTD qualifies for section 80C, and provides attractive interest rates of up to around 7.5%. These provide tax benefits under Section 80C.

  7. National Savings Certificate (NSC): Investment in NSC can help save income tax for salaried employees under Section 80C. You can choose to invest in NSC's with lock-in periods of 5 years.

  8. Employee Provident Fund (EPF): As per rules, salaried employees are required to contribute 12% of their basic salary and Dearness Allowance (DA) in their EPF account. Contributions to EPF are tax free, and can help save income tax for salaried employees.

  9. Public Provident Fund (PPF): PPF is a government-backed, long-term investment and savings scheme which allows tax exemptions under Section 80C. These have an EEE - Exempt-Exempt-Exempt status. minimum tenure of 15 years, and provide interest payouts of up to 7.1%.

  10. Sukanya Samriddhi Account: You can avail tax deductions up to a maximum of Rs 1.5 lakh in a financial year for making deposits in the Sukanya Samriddhi Yojana for your girl child. This is a long-term investment, with the benefit of compounding.

  11. National Pension Scheme (NPS): This is a government-backed pension scheme for the employees of the public, private and unorganised sectors. Under Section 80C, you can claim deductions up to Rs 1.5 lakh, in any given financial year, for making contributions towards the scheme.

Conclusion 

Thus, as a new employee, you can choose to invest in a wide variety of options to claim tax benefits. Among these options, ULIPs can be the best alternative to help save income tax for salaried employees. You can select the which allows tax benefits for making premium payments under Section 80C. What’s more the amount received on maturity or as death benefit is also exempt from tax under Section 10D. You can also opt for partial withdrawals to meet any emergency requirements. The also adds to your savings through loyalty and wealth boosters.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

Recent Blogs

What Is an Employee Salary Slip? Format, Components & Tax Benefits
19 Mar '26
4087 Views
13 minute read
Learn what a salary slip is, why it matters, and how it impacts your tax-saving strategies. Includes downloadable format and latest rules.
Read More
Tax Saving
What is TDS and TCS? Difference Between TDS and TCS
18 Mar '26
8057 Views
9 minute read
Understand the key differences between TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) for smarter tax savings. Explore the Canara HSBC Life Insurance blog for insights.
Read More
Tax Saving
What Is Tax Liability? Meaning, Calculation & Examples
05 Mar '26
1995 Views
7 minute read
Tax liability is the total tax payable after deductions and exemptions. Learn its meaning, how to calculate tax liability and how it affects ITR filing in India with examples for individuals.
Read More
Tax Saving
Which ITR Should You File? Income Tax Return Guide
03 Mar '26
1266 Views
10 minute read
Learn the changes in the income tax return rules for FY 2025-26. Understand the alterations and determine the appropriate ITR form for filing your tax return this year.
Read More
Tax Saving
Section 195 of Income Tax Act - TDS for NRIs Explained
25 Feb '26
1069 Views
7 minute read
Learn all about Section 195 of the Income Tax Act, its applicability on NRI payments, TDS rates & how it impacts non-resident Indians earning in India.
Read More
Tax Saving
FATCA Declaration: Meaning, Eligibility & Filing Guide
25 Feb '26
67 Views
6 minute read
Understand FATCA declaration requirements, who must submit it, reporting rules for foreign financial assets, and why compliance is important for Indian taxpayers.
Read More
Tax Saving
Income Tax Rates in India: Latest Slabs & Comparison Guide
25 Feb '26
79 Views
6 minute read
Explore current income tax rates under old and new regimes, slab-wise comparisons, and practical tips to select the most suitable tax regime for your income profile.
Read More
Tax Saving
Latest TDS Rate Chart FY 2025-26 - Section-Wise Breakdown
24 Feb '26
1224 Views
7 minute read
Looking for the latest TDS rates? Check the complete TDS rate chart for FY 2025-26 (AY 2026-27) covering all sections, thresholds & applicable rates.
Read More
Tax Saving
Form 10E of Income Tax: Claim Tax Relief on Arrears
24 Feb '26
1444 Views
7 minute read
Learn what Form 10E is, who should file it, and how to claim tax relief on salary arrears or advance salary us 89(1) while filing your income tax return.
Read More
Tax Saving

Tax Savings - Top Selling Plans

We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.

Family Shield: Enhanced Protection

iSelect Smart360 Term Plan
  • 3 Plan options
  • Life cover till 99 years
  • Steady income benefit
  • Block your premium at inception

Fixed Returns, Zero Risks & Worries

iSelect Guaranteed Future Plus
  • 4 Plan options
  • Life cover + Guaranteed benefits
  • Accidental death benefit
  • Premium protection cover

Start Young, Pay Less, Stay Secured

Young Term Plan
  • Life cover till 99 years
  • Coverage for spouse
  • Block your premium rate
  • Covers 40 critical illness