Tax Saving Deductions Guide — Section 80C, 80D, HRA & More FY 2025-26
Tax planning is about knowing which deductions you qualify for and making the right investments before the financial year ends. Here is your complete guide to all major tax-saving deductions under the Income Tax Act.
Under the old tax regime, you can claim deductions worth up to Rs 4-5 lakh or more per year. Under the new regime, most of these deductions are not available — so choosing the right regime is your first tax-saving decision.
Section 80C — The Most Popular Deduction (Up to Rs 1.5 Lakh)
Section 80C allows a deduction of up to Rs 1.5 lakh for investments and eligible expenses. Here are the most common options:
| Investment/Expense | What It Is |
|---|---|
| Employee Provident Fund (EPF) | Your contribution to EPF (automatically deducted from salary) |
| Public Provident Fund (PPF) | Voluntary investment, 15-year lock-in, currently ~7.1% interest |
| ELSS (Equity Linked Savings Scheme) | Mutual funds with 3-year lock-in, market-linked returns |
| Life Insurance Premium | Premium paid for own, spouse, or children's life insurance |
| National Savings Certificate (NSC) | Post office scheme, 5-year maturity, ~7.7% interest |
| Tax-Saving Fixed Deposit | 5-year lock-in FD with banks, ~7-8% interest |
| Sukanya Samriddhi Yojana | For girl child education, high interest (~8.2%) |
| Tuition Fees | For children's full-time education (up to 2 children) |
| Principal Repayment of Home Loan | EMI principal component qualifies under 80C |
Section 80CCD(1B) — NPS Additional Deduction (Up to Rs 50,000)
In addition to the Rs 1.5 lakh under 80C, you can claim an extra Rs 50,000 by investing in the National Pension System (NPS). This makes total 80C + 80CCD(1B) deductions worth up to Rs 2 lakh.
Section 80D — Health Insurance Premium
| Who You Insure | Maximum Deduction |
|---|---|
| Self, spouse, and children | Rs 25,000 |
| Self (if senior citizen) | Rs 50,000 |
| Parents (below 60) | Rs 25,000 |
| Parents (senior citizen) | Rs 50,000 |
| Preventive health checkup | Rs 5,000 (within overall limit) |
A family of four with senior citizen parents can claim up to Rs 1,25,000 under Section 80D (Rs 25,000 for self+family + Rs 50,000 for self senior + Rs 50,000 for senior parents).
HRA Exemption — Rent Paid
If you live in rented accommodation and receive HRA as part of your salary, you can claim exemption. The exemption is the least of:
- Actual HRA received
- 50% of salary (for metro cities) or 40% (for non-metro cities)
- Actual rent paid minus 10% of salary
If you do not receive HRA but pay rent, you can still claim deduction under Section 80GG up to Rs 60,000 per year.
Section 24(b) — Home Loan Interest
Interest paid on a home loan for a self-occupied property is deductible up to Rs 2 lakh per year. For let-out properties, the entire interest is deductible (no upper limit).
Section 80E — Education Loan Interest
Interest paid on education loans for higher studies (for self, spouse, children, or ward) is fully deductible with no upper limit. Available for 8 years or until the interest is fully paid, whichever is earlier.
Section 80G — Donations
Donations to approved charitable institutions qualify for deduction. Some donations (like the Prime Minister's Relief Fund) qualify for 100% deduction, while others qualify for 50%. Check the eligible percentage before donating.
Standard Deduction (Rs 75,000)
Available under both regimes for salaried employees. This is a flat deduction — you do not need to invest anything to claim it.
Tax Planning Checklist
- Invest in 80C early — Start PPF or ELSS at the beginning of the financial year
- Buy health insurance — Essential for both tax savings and financial protection
- Maximize NPS — The extra Rs 50,000 under 80CCD(1B) is often overlooked
- Track home loan components — Both principal (80C) and interest (24(b)) are deductible
- Review your regime choice — Calculate tax under both regimes to pick the right one
Frequently Asked Questions
Can I claim both 80C and NPS deductions?
Yes. 80C covers up to Rs 1.5 lakh, and 80CCD(1B) provides an additional Rs 50,000 for NPS investments. Additionally, employer NPS contributions under 80CCD(2) are separate and not subject to the Rs 1.5 lakh limit.
What if I miss the investment deadline?
Investments must be made within the financial year (by 31 March 2026 for FY 2025-26). Payments made after 31 March cannot be claimed for the previous year.
Are these deductions available under the new tax regime?
Most deductions listed here are not available under the new tax regime. Exceptions include the standard deduction (Rs 75,000) and employer NPS contribution. See our old vs new regime comparison for details.
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