How a Young Tech Employee Saved ₹45,000 in Taxes Using AI
Innovative Tax Savings Approach
Every March, a common question trends on social media and YouTube: “How to save on taxes?” Numerous videos and countless strategies flood the internet. Should you buy insurance, invest in ELSS, or contribute to PPF? Is tax saving really that straightforward? This year, a young tech professional took a different route. Instead of consulting a Chartered Accountant (CA), he turned to the generative AI chatbot ChatGPT and asked, “I earn ₹15 lakh CTC, how can I save on taxes for FY 2024-25?”
The Outcome? A savings of over ₹45,000 without watching financial guru videos or paying a CA.
Salary Structure and Initial Thoughts
This individual has a total CTC of ₹15,00,000, which includes:
Basic Salary: ₹6,00,000
HRA: ₹3,00,000
Special Allowance: ₹3,00,000
Bonus: ₹2,00,000
Employer's PF: ₹72,000
At first glance, everything seems fine. However, the AI asked some crucial questions: "Do you live on rent?", "What is your rent amount?", "Which city do you reside in?" This is where the savings journey began.
HRA Exemption
If you live in a metro city and pay rent, you can avail significant HRA exemptions. The AI calculated:
Actual HRA: ₹3,00,000
50% of Basic Salary (for metro): ₹3,00,000
Rent – 10% of Basic: ₹2,40,000
This means a ₹2,40,000 HRA exemption, leaving only ₹60,000 taxable. Previously, this individual was paying tax on ₹3 lakh. Thus, just this adjustment led to substantial savings.
Maximizing Deductions under Sections 80C, 80D, and 80G
The AI reminded him of sections 80C, 80D, and 80G, which are often overlooked during form filling. He discovered valid deductions totaling ₹1,77,000:
Standard Deduction: ₹50,000
EPF: ₹72,000
Term Insurance: ₹20,000
Health Insurance (80D): ₹25,000
Donation to NGO (80G): ₹10,000
Additionally, ChatGPT suggested options like PPF, ELSS, and home loans that he could incorporate as per his convenience.
Advice on Restructuring Bonuses
The AI recommended restructuring the annual ₹2 lakh bonus to save even more on taxes:
Leave Travel Allowance (LTA)
Reimbursement for fuel and driver expenses
Expenses for books and skill development
Work From Home Allowance
Through these options, employees can make parts of their bonuses non-taxable, provided the company HR allows it.
Old vs. New Tax Regime
The AI compared both tax regimes:
| Description | Old Tax Regime | New Tax Regime |
|---|---|---|
| Gross Salary | ₹15,00,000 | ₹15,00,000 |
| HRA Exemption | - ₹2,40,000 | ❌ |
| Standard Deduction | - ₹50,000 | ✅ |
| 80C (PF+Insurance) | - ₹92,000 | ❌ |
| 80D | - ₹25,000 | ❌ |
| 80G | - ₹10,000 | ❌ |
| Total Taxable Income | ₹10,83,000 | ₹14,50,000 |
| Estimated Tax Liability | ₹1,37,640 | ₹1,82,500 |
Under the old regime, he saved ₹44,860.
Is This Possible for Everyone?
Experts suggest that if your income structure is straightforward—just salary, a few deductions, and no business income—you can plan your taxes independently. With the right information, digital tools, and timely preparation, not only can you save on taxes, but you can also achieve financial independence.
Tax Saving Checklist for FY 2024–25
✔️ Reassess HRA
✔️ Fully utilize 80C with EPF, PPF, ELSS
✔️ Don’t forget health insurance (80D)
✔️ Take advantage of donations (80G)
✔️ Compare old vs. new tax regimes
✔️ Discuss allowances with HR
✔️ Start tax planning before March
AI Assistance but Common Sense is Key
While AI provided remarkable results, seeking expert advice may still be necessary in complex income scenarios (like freelancing, rental income, capital gains, etc.). This story illustrates that tax saving is no longer limited to Chartered Accountants. Equipped with technology and information, an average citizen can now make informed decisions. If a simple question—“How can I save on taxes?”—can lead to a savings of ₹45,000, imagine the financial freedom achievable with consistent focus throughout the year. Tax saving is not magic; it’s a game of awareness and planning.