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How to save tax with no investment in 2021-22?

Filing income tax returns (ITRs) can get tedious for taxpayers. Not only does one have to ensure that they pay their taxes on time, but also make certain that their investments for saving tax are done. If one does not claim eligible deductions, they end up paying more in taxes, which could have otherwise been saved.

However, the common belief that one has to invest in tax-saving instruments to save tax isn’t necessarily true. Whether a taxpayer faces liquidity issues, or decides against investing in new tax-saving instruments for any other reason, it is possible to save tax with no investment for the new fiscal year. Here are a few ways in which taxpayers can save tax, without investing in new instruments for FY 2021-22.

Children’s Tuition Fees and Hostel Allowance

Under section 10(14) of the Income Tax Act, 1961, any special allowance given by the employer to their employee towards the education of the employee’s children (maximum of two), along with the hostel expenditure is granted an exemption. This exemption for children’s education allowance is restricted to Rs. 100 per month, while the hostel expenditure is restricted to Rs. 300 per month.

Furthermore, under section 80C of the Income Tax Act, the tuition fees for full-time education of maximum two children of the employee, paid to any educational institution in India by their employer is also eligible for deduction of up to Rs. 1.5 lakh.

Deduction for Interest Paid on Home Loans

For individuals buying a home for the first time, a special provision has been put in place, providing deduction for the interest paid on home loans. Home loan EMIs consist of a principal component and an interest component. Under section 80EE of the Income Tax Act, individual taxpayers can claim a deduction of up to Rs. 50,000 on the interest component of the EMIs paid by them. However, the loan amount should not exceed Rs. 35 lakh, while the value of the residential home should not exceed Rs.50 Lakhs

Furthermore, under section 80C of the Income Tax Act, the principal component of the EMIs can also be availed as a deduction, with the overall limit being Rs. 1.5 lakh.

House Rent Allowance

Self-employed and salaried individuals working in places where they do not own residential properties can avail the deduction of House Rent Allowance (HRA), based on the rent they pay. Section 10(13A) of the Income Tax Act, with respect to House Rent Allowance (HRA) offers exemption of least of the following amounts:

a) 40 – 50 percent of the amount they receive as salary (50 percent in case the employee is living in a metropolitan city)

b) The actual amount that is received as HRA

c) The rent amount that exceeds 10 percent of the employee’s salary

To claim the tax benefit, the taxpayer has to provide the rent receipts, along with other details to the employer, in order to calculate the exemption amount.

Employees’ Provident Fund (EPF)

One of the deductions made from the employee’s salary is the Employees’ Provident Fund (EPF), and has to be taken into consideration while calculating tax deductions. Under section 80C of the Income Tax Act, this contribution made by the employees towards a recognized provident fund is allowed as a deduction, with the overall limit being Rs. 1.5 lakh.

Education Loan

Under section 80E of the Income Tax Act, individual taxpayers who might have taken an education loan for higher education, either for themselves, their spouse or their children can claim deduction on the repayment of interest on the loan. However, the deduction is not allowed on the principal component of the loan, and the time period for this deduction is 8 years, which either begins from the time the repayment period starts, or until the interest amount is repaid in full.

Standard Deduction on Employee’s Salary

While calculating the tax liability of all the salaried employees, the employer takes into consideration a standard deduction of up to Rs. 50,000, which is available while filing income tax returns (ITRs). Employees must also consider the standard deduction while calculating their total tax liability, while planning their taxes for FY 2021-22.


Taxpayers can choose not to invest in new tax-saving instruments for various reasons, and can still save tax on certain expenses that are eligible for tax deduction. With proper planning, taxpayers can avail deductions on the expenses mentioned, and can save tax with no investment during the financial year.

That said, if one wants to save tax through new investments, insurance policies serve as favourable tax-saving instruments. The iSelect Star Term Plan from Canara HSBC Oriental Bank of Commerce Life Insurance provides customized insurance plans, offering tax benefits under Section 80C while also providing a safety net for one’s family. With the iSelect Star Term plan, policyholders can avail features such as whole life cover, return of premium, multiple payout option and increased coverage option.

Parvesh Maurya
Parvesh Maurya
Parvesh Maurya, has 5 years of experience in writing Finance Content, Entertainment news, Cricket and more. He has done BA in English. He loves to Play Sports and read books in free time. In case of any complain or feedback, please contact me @
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