68% of IT workers missed out Rs 49,000 in tax savings-How to avoid mistakes

Business Standard

13-05-2025

If you're a salaried professional in India—especially in IT—chances are you paid more tax than you needed to in FY 2024-25. In fact, according to a recent analysis by 1 Finance, 68% of IT professionals missed out on tax savings worth Rs 49,094 on average! The reason? Poor tax planning and limited awareness of deductions
IT professionals often earn high CTCs, but when it comes to tax planning, many choose the DIY route—relying on limited information, sticking with the default tax regime, or taking last-minute decisions. The result? Missed deductions, wrong tax regime choices, and unnecessary tax payments. To understand just how widespread these inefficiencies are, 1 Finance studied the tax profiles of 1,865 IT professionals for the financial year FY 2024-25.
What's going wrong?
1. Wrong Tax Regime Choices
About 33% of professionals chose the wrong tax regime, often by default or based on assumptions—not calculations.
Old vs New Regime: Many didn't factor in available deductions under the old regime (like HRA, 80C, and 80D) before opting for the new, 'zero-deduction' regime.
Quick Fixes: Some made last-minute declarations without consulting a tax advisor, resulting in missed benefits.
2. Overlooked Deductions and Benefits
Even among those who stayed in the old regime, key deductions went unused:
HRA not claimed correctly due to mismatched rent receipts or employer documentation gaps.
Section 80C left partially unutilized, especially by those who didn't invest in ELSS or life insurance early in the year.
3. Corporate NPS: A Missed Opportunity
Perhaps the biggest surprise? 8 out of 10 professionals missed out on Corporate NPS benefits.
This low-cost, employer-facilitated pension scheme can help you:
Save an additional Rs 50,000 under Section 80CCD(2) (on top of 80C)
Build long-term retirement savings with tax deferral benefits
But most employees either don't opt in or their companies don't promote it, fearing administrative work or legal complexity. Employees, on the other hand, avoid it due to the long lock-in period and lack of clarity around how it works.
Despite Corporate NPS contributions being fully deductible for companies under Section 36(1)(iva), very few employers offer this benefit, and even fewer employees take full advantage of it.
4. Compliance gaps and costly mistakes a CA can help avoid
Even beyond missed deductions, DIY tax filing often leaves hidden compliance gaps—errors that a qualified CA would catch and correct upfront. Among the IT professionals:
4% needed to deduct TDS on rent of more than ₹50K/month. Non-compliance could lead to 1%-1.5% monthly interest and a penalty of ₹200 per day for default.
13% was required to pay advance tax, which, if not paid timely, leads to interest of 1% per month.
31% had two or more income streams (e.g., salary + freelancing), increasing the chance of using the wrong ITR form or missing income disclosures.
15% held cryptos, an area where misreporting or incorrect ITR selection is common.
What You Can Do Differently
Compare regimes annually: Don't stick with the same tax regime without reviewing your income and deductions each year.
Explore Corporate NPS: Ask your employer about setting it up. If available, it's one of the most underutilized tools to save beyond 80C.
Don't wait till March: Tax planning is a year-long process. Spread your investments and keep track to avoid rushed decisions.