Every year, millions of Indians pay more income tax than they need to — simply because they don't know about or don't use all the legal deductions and exemptions available to them. In FY 2025-26, you can potentially save ₹1–2 lakh or more in tax with the right planning, especially if you're in the Old Tax Regime.
🔢 First, know your tax liability: Use our Income Tax Calculator to calculate your current tax and see how deductions reduce it.
Before looking at deductions, you need to decide: New Regime or Old Regime?
The most popular tax-saving section. Invest in any of these to claim ₹1.5L deduction:
Recommendation: Use ELSS for the best returns. PPF for the most safety. Don't buy LIC/ULIP just for tax saving — returns are poor.
This is over and above the ₹1.5L 80C limit. Invest ₹50,000 in NPS (Tier 1) and get an extra ₹50,000 deduction. If you're in the 30% slab, this saves ₹15,000 in tax. NPS returns have been 9–11% historically, though with a 60% lock-in until retirement.
Even if your employer provides group health insurance, getting an individual policy is important for coverage continuity and tax saving.
If you have a home loan on a self-occupied property, you can claim up to ₹2 lakh deduction on interest paid. For under-construction properties, the entire interest during construction period can be claimed in 5 equal installments after possession.
🏠 Calculate EMI first: Use our Home Loan EMI Calculator to plan your home purchase.
If you live in a rented house and receive HRA from your employer, the exemption is the minimum of: actual HRA received, 50% of basic salary (40% for non-metro), or actual rent paid minus 10% of basic salary. Keep rent receipts and the landlord's PAN if annual rent exceeds ₹1 lakh.
All salaried employees get ₹50,000 standard deduction automatically. No receipts needed. For the New Regime, this is ₹75,000 from FY 2024-25 onwards.
LTA exemption is available for domestic travel (train or air) for yourself and family, twice in a block of 4 years. Only the travel cost (tickets) is exempt — not hotel stays. The current block is 2022–2025.
Interest paid on education loan for self, spouse, children, or a student you're a legal guardian of is fully deductible — no upper limit. The deduction is available for 8 years or until the loan is repaid, whichever is earlier.
Interest earned from savings bank accounts is exempt up to ₹10,000 per year under 80TTA. For senior citizens, Section 80TTB provides ₹50,000 exemption on interest from savings and fixed deposits.
Donations to approved organizations are eligible for 50% or 100% deduction. PM CARES Fund, PM National Relief Fund, and certain recognized institutions give 100% deduction without limit. Ensure you get an 80G certificate from the organization.
If your employer contributes to your NPS account (up to 10% of basic for private employers, 14% for government), this is deductible over and above the ₹2L limit of 80C + 80CCD(1B). This is exclusively available in the Old Regime and is one of the few deductions allowed in the New Regime as well.
If you're self-employed or don't receive HRA from your employer but pay rent, you can claim deduction under 80GG — the minimum of 25% of total income, ₹5,000/month, or actual rent minus 10% of income.
| Deduction | Max Amount | Tax Saved (30% slab) |
|---|---|---|
| 80C (ELSS/PPF/EPF) | ₹1,50,000 | ₹46,800 |
| 80CCD(1B) — NPS | ₹50,000 | ₹15,600 |
| 80D — Health Insurance | ₹75,000 | ₹23,400 |
| Section 24 — Home Loan | ₹2,00,000 | ₹62,400 |
| HRA Exemption | Depends on rent | Variable |
| Total Possible Savings | ₹4,75,000+ | ₹1,48,200+ |