Every income tax deduction available to Indian taxpayers in AY 2026-27 — Section 80C to 80U, 24(b), 80GG, NPS, home loan, health insurance, education loan, donations, capital gain exemptions — with worked examples, regime-wise comparisons, salary-bracket strategies and 30+ CA-grade FAQs.
If you earn in India, deductions are the single biggest lever you control. Two people earning ₹15 lakh can pay tax bills that differ by ₹1.5 lakh+ — purely because one of them knows the Income Tax Act, and the other doesn't. This is the most comprehensive deduction guide written for AY 2026-27 (FY 2025-26): every section, every limit, every regime caveat, every salary bracket strategy. Read it once, save it, and revisit it every March.
A deduction is an amount the Income Tax Act allows you to subtract from your Gross Total Income before tax is calculated. If your salary is ₹12,00,000 and you claim ₹2,00,000 of deductions, you pay tax only on ₹10,00,000. Every rupee of deduction saves tax at your marginal slab rate — so a ₹1,50,000 80C investment for someone in the 30% slab saves ₹46,800 (₹45,000 + 4% cess).
Deductions live primarily in Chapter VI-A of the Income Tax Act (Sections 80C to 80U) plus a few standalone provisions like Section 24(b) for home loan interest and the standard deduction under Section 16.
| Concept | What it does | Examples | Stage of calculation |
|---|---|---|---|
| Exemption | Income that is fully outside the tax base | HRA, LTA, agricultural income, PPF interest | Before computing Gross Total Income |
| Deduction | Amount subtracted from Gross Total Income | 80C, 80D, 24(b), 80CCD(1B) | After GTI, before tax |
| Rebate | Direct reduction in tax payable (₹ for ₹) | 87A rebate up to ₹25,000 (new) / ₹12,500 (old) | After tax is calculated |
Exemption removes the income from the tax map; deduction reduces taxable income; rebate cuts your final tax bill. Use all three together for maximum savings.
Since FY 2023-24, the new regime is the default. You must actively opt in to the old regime via Form 10-IEA (business income) or by selecting it while filing (salaried). Here is the precise list of what each regime allows.
Choosing the wrong regime is the most common tax-filing mistake. Run both numbers before you file. See our detailed guide: New vs Old Tax Regime AY 2026-27.
| Section | Purpose | Max limit | Old regime | New regime |
|---|---|---|---|---|
| 16(ia) | Standard deduction | ₹75,000 | Yes | Yes |
| 80C | PPF/EPF/ELSS/LIC/principal | ₹1,50,000 | Yes | No |
| 80CCC | Pension fund (LIC/Insurer) | Within ₹1.5L | Yes | No |
| 80CCD(1) | Self NPS contribution | 10% of salary, within ₹1.5L | Yes | No |
| 80CCD(1B) | Additional NPS | ₹50,000 | Yes | No |
| 80CCD(2) | Employer NPS | 10%/14% of basic | Yes | Yes |
| 80D | Health insurance | ₹25k / ₹50k / ₹1L | Yes | No |
| 80DD | Disabled dependant | ₹75k / ₹1.25L | Yes | No |
| 80DDB | Specified diseases | ₹40k / ₹1L (senior) | Yes | No |
| 80E | Education loan interest | No cap, 8 years | Yes | No |
| 80EE | First-time homebuyer interest | ₹50,000 | Yes | No |
| 80EEA | Affordable housing interest | ₹1,50,000 | Yes | No |
| 80EEB | Electric vehicle loan | ₹1,50,000 | Yes | No |
| 24(b) | Home loan interest (SOP) | ₹2,00,000 | Yes | No (only let-out) |
| 80G | Donations | 50% / 100% | Yes | No |
| 80GG | Rent without HRA | ₹60,000 | Yes | No |
| 80GGA | Scientific research donation | 100% | Yes | No |
| 80GGC | Political party donation | 100% | Yes | No |
| 80TTA | Savings interest | ₹10,000 | Yes | No |
| 80TTB | Senior — all interest | ₹50,000 | Yes | No |
| 80U | Self disability | ₹75k / ₹1.25L | Yes | No |
Section 80C is the most-used and most-misunderstood deduction in India. The cap is ₹1,50,000 combined — every eligible instrument shares the same ceiling. Pumping ₹1.5L into PPF and ₹1.5L into ELSS doesn't give you ₹3L of deduction; it gives you ₹1.5L.
| Instrument | Lock-in | Returns (approx) | Risk | Taxability on maturity |
|---|---|---|---|---|
| PPF | 15 years | 7.1% (Q1 FY26) | Sovereign | EEE — fully tax-free |
| EPF | Till retirement | 8.25% | Sovereign | Tax-free after 5 yrs service |
| ELSS | 3 years | 12-15% historical | Market | LTCG > ₹1.25L taxed @10% |
| NSC | 5 years | 7.7% | Sovereign | Interest taxable; reinvested int counts in 80C |
| Tax Saver FD | 5 years | 6.5-7.5% | Bank | Interest fully taxable |
| Sukanya Samriddhi | 21 yrs / marriage | 8.2% | Sovereign | EEE — fully tax-free |
| LIC premium | Policy term | 4-6% | Insurer | Tax-free if premium ≤ 10% of sum assured |
| Home loan principal | Tenure | N/A | N/A | N/A |
| Tuition fees | N/A | N/A | N/A | Max 2 children |
If you have a home loan, your principal repayment ALREADY uses ₹1.5L of the 80C bucket — verify before topping up with PPF/ELSS.
Premium paid for an annuity plan from LIC or any insurer is deductible up to ₹1.5L — but it shares the cap with 80C and 80CCD(1). The pension received later is taxable as 'income from other sources'. Rarely the optimal first choice; use only if you specifically want guaranteed lifelong pension.
If you contribute to your NPS Tier-1 account out of your own pocket, the deduction is the LOWER of: 10% of salary (basic + DA) for salaried; 20% of gross total income for self-employed; or the unused portion of the ₹1.5L 80C bucket. So 80CCD(1) effectively rides inside the same ₹1.5L ceiling.
This is the holy grail of additional tax saving. Contribute ₹50,000 to NPS Tier-1 OVER AND ABOVE the ₹1.5L 80C limit and claim a separate deduction. For a 30% slab taxpayer, this single line saves ₹15,600/year — and the contribution itself becomes retirement corpus.
Combine 80C (₹1.5L) + 80CCD(1B) (₹50k) = ₹2L of investment-linked deduction. This is the simplest 'set and forget' tax move available to every Indian taxpayer.
This is the only 80-series deduction that survives in the new regime. If your employer contributes to your NPS Tier-1 account, the contribution (up to 14% of basic+DA for government employees and central NPS subscribers under new regime, 10% for private under old regime, 14% under new regime per Budget 2024) is fully deductible — without any cap inside Chapter VI-A.
Worked example: Basic ₹10,00,000. Employer NPS = ₹1,40,000 (14%). This entire ₹1.4L is deductible in BOTH regimes. At 30% slab + cess = ₹43,680 saved annually with zero out-of-pocket. Ask HR to set this up.
| Who is insured | Self & family < 60 | Self < 60 + Parents < 60 | Self < 60 + Parents ≥ 60 | Self ≥ 60 + Parents ≥ 60 |
|---|---|---|---|---|
| Self / spouse / kids premium | ₹25,000 | ₹25,000 | ₹25,000 | ₹50,000 |
| Parents' premium | — | ₹25,000 | ₹50,000 | ₹50,000 |
| Total 80D max | ₹25,000 | ₹50,000 | ₹75,000 | ₹1,00,000 |
Preventive health check-up of up to ₹5,000 is INCLUDED inside the above limits (not additional). Payment must be non-cash except for the check-up which can be in cash.
Read our full breakdown: Section 80D Health Insurance Deduction Guide.
Interest on a loan for higher education (self, spouse, children, or student of whom you are legal guardian) is FULLY deductible — no upper cap. Deduction is available for 8 assessment years starting from the year repayment begins, or until interest is fully paid, whichever is earlier. Principal repayment is NOT covered.
Up to ₹2,00,000 deductible for SELF-OCCUPIED property; NO cap for LET-OUT property (subject to overall house property loss set-off of ₹2L; balance carried forward 8 years). Pre-construction interest is allowed in 5 equal instalments starting the year of completion.
See the deep-dive: Section 24(b) Home Loan Interest Deduction Guide.
If you don't receive HRA from your employer but pay rent, claim the LEAST of: ₹5,000/month (₹60k/year); 25% of total income; rent paid minus 10% of total income. Must file Form 10BA. You, your spouse, or your minor child must NOT own a house in your city of work.
| Category | Deduction | Cap |
|---|---|---|
| 100% without qualifying limit | PM Cares, PM National Relief, National Defence | No cap |
| 50% without qualifying limit | PM's Drought Relief, Jawaharlal Nehru Memorial | No cap |
| 100% with qualifying limit | Government for family planning, sports | 10% of adjusted GTI |
| 50% with qualifying limit | Most registered NGOs / trusts | 10% of adjusted GTI |
Cash donations above ₹2,000 are NOT deductible. Use bank transfer / UPI and collect a Section 80G receipt with the trust's registration number and PAN.
Both regimes give zero tax via Section 87A rebate (up to ₹5L old / ₹7L new). Choose new regime for simplicity. No deduction planning needed.
80CCD(2) survives in BOTH regimes. Ask HR to add it to your CTC even if you stay on new regime.
Only four — standard deduction ₹75,000, 80CCD(2) employer NPS, 80JJAA, and 24(b) on let-out property. All other Chapter VI-A deductions are unavailable.
There is no hard cap. A salaried taxpayer with home loan, NPS, max 80D and donations can realistically claim ₹7-10 lakh of deductions in a year.
Combined. PPF + ELSS + LIC + EPF + home loan principal all share the same ₹1,50,000 ceiling.
Yes — 80CCD(1B) is an ADDITIONAL ₹50,000 over and above the ₹1.5L 80C limit. Both together = ₹2L.
Only for central government employees with a 3-year lock-in. For everyone else, only Tier-1 contributions qualify.
Yes if paid to a recognised hospital and supported by a bill. Insurance premium for ayurveda treatment cover is also eligible.
Yes — ₹75,000 standard deduction applies to pension income too, in both regimes.
Not in the year of payment. Pre-construction interest is bundled and claimed in 5 equal instalments starting the year of completion, subject to the overall ₹2L cap.
Yes — if both are co-owners AND co-borrowers AND both contribute EMIs. Each can claim up to ₹2L (SOP) — total ₹4L household.
Yes — Section 80GG disqualifies only if you, your spouse, or your minor child own residential property in the city where you work and pay rent.
No — only fees paid to Indian schools / colleges / universities qualify. Maximum 2 children.
Yes — the loan must be in the name of self, spouse, children, or a student of whom you are the legal guardian.
GTI minus 80C-80U deductions (except 80G itself), long-term capital gains, and short-term gains u/s 111A.
No — seniors must claim 80TTB instead (₹50,000 on all interest), and cannot claim 80TTA.
Only ELSS (Equity Linked Savings Scheme) mutual funds with a 3-year lock-in qualify. Regular equity / debt funds do NOT.
Yes — HUFs can claim 80C, 80D, 80G, 80DD, 80DDB, 80TTA. HUFs CANNOT claim 80CCC, 80CCD, 80E, 80EE, 80EEA, 80U.
Yes — stamp duty and registration charges paid in the year of property purchase are eligible u/s 80C (within the ₹1.5L cap).
No — travel insurance is not a 'health insurance policy' as defined under IRDAI. Only mediclaim and top-up health policies qualify.
Salaried with no business income — yes, every year. Business income — only ONCE in lifetime to opt out of new regime via Form 10-IEA; you can return to new regime only once.
Yes — deductions declared to your employer appear in Part B of Form 16. Any deductions you missed declaring can still be claimed in your ITR — the refund will be processed by the department.
Yes — you can claim 80D for parents' premium that YOU pay, irrespective of whether they file their own returns. Just keep the proof of payment from your account.
Section 80EE / 80EEA windows have closed for new loans. First-time buyers today rely on Section 24(b) ₹2L + 80C principal ₹1.5L.
No — 80C life insurance is only for self, spouse, or children. In-laws, siblings, parents are NOT eligible.
No — 80D covers premium for the policy; 80DDB covers actual treatment expense for specified diseases (less any insurance reimbursement).
Yes — Section 80GGC allows 100% deduction for donations to registered political parties / electoral trusts, paid via non-cash. No upper cap, but cannot reduce taxable income below zero.
No — the ₹5,000 preventive check-up is included WITHIN the overall 80D cap, not over and above.
No — depreciation is allowed only on assets used for business / profession. Salaried employees cannot claim it for personal laptops / vehicles.
Yes — interest paid on loans from ANY source (including individuals) is deductible u/s 24(b) provided you have a written agreement and a Section 197A interest certificate from the lender.
Section 80EEB — ₹1,50,000 interest on EV loan, loan sanctioned between 1 Apr 2019 and 31 Mar 2023. Closed for new loans now.
Yes — deductions are claimed in Schedule VI-A which is part of every ITR form (1, 2, 3, 4). The form you file depends on income type, not deduction eligibility.
The Indian Income Tax Act gives you dozens of legitimate ways to reduce your tax bill — but the system rewards taxpayers who plan in April, not those who scramble in March. Pick the four or five deductions that matter for your profile (80C + 80CCD(1B) + 80D + 24(b) is the classic salaried combo), automate the payments, reconcile with AIS / Form 16 in May, and file your ITR by 31 July. If you want a CA to build this entire stack for you and file with full confidence, Taxpex is one click away.
Senior contributor at Taxpex Consultancy. Reviewed by a practising Chartered Accountant. Published on 8 June 2026 · Updated on 8 June 2026.
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