Tax Saving Tips —
Legally Cut Your Income Tax
The deductions and exemptions that actually reduce your income tax — 80C, 80D, NPS, HRA and home-loan interest under the old regime — and what still saves tax under the default new regime.
To save the most income tax in FY 2025-26 under the old regime: invest Rs 1.5 lakh in Section 80C (PPF, ELSS, EPF, LIC, home-loan principal), add Rs 50,000 in NPS under 80CCD(1B), pay health-insurance premium under 80D (up to Rs 1 lakh), claim HRA if you rent, and deduct home-loan interest up to Rs 2 lakh under Section 24(b). Under the new regime (default), you keep only the Rs 75,000 standard deduction, employer NPS under 80CCD(2), and the enhanced 87A rebate up to Rs 12 lakh taxable income.
The new tax regime is the default from FY 2023-24. It has lower slab rates and a Rs 75,000 standard deduction but disallows 80C, 80D, HRA and most deductions. Most of the tips below apply only to the old regime — so compare both regimes first and opt for the old one only if your deductions justify it.
Old Regime — Complete Tax-Saving Checklist
Every deduction below is available only under the old regime. Opt for the old regime in your ITR to claim them. Each row shows the section and the maximum benefit.
| Section | What it covers | Max deduction |
|---|---|---|
| 80C | PPF, ELSS, EPF/VPF, LIC, NSC, SSY, home-loan principal, tuition fees | Rs 1,50,000 |
| 80CCD(1B) | Extra NPS Tier-1 contribution, over and above 80C | Rs 50,000 |
| 80D | Health-insurance premium (self + parents, senior-citizen higher) | up to Rs 1,00,000 |
| 24(b) | Home-loan interest on a self-occupied house | Rs 2,00,000 |
| 10(13A) | HRA exemption for salaried employees who pay rent | Varies |
| 80TTA / 80TTB | Savings interest (all) / bank interest (senior citizens) | Rs 10k / Rs 50k |
| 80G | Donations to approved funds (50% or 100%) | Varies |
Section numbers follow the Income-tax Act, 1961 (renumbered under the Income-tax Act, 2025 from AY 2026-27; limits unchanged). Old regime only.
- Section 80C filled to Rs 1.5L (PPF / ELSS / EPF / LIC)
- Rs 50,000 NPS under 80CCD(1B)
- Health-insurance premium for self & parents (80D)
- HRA exemption claimed with rent receipts & landlord PAN
- Home-loan interest up to Rs 2L under 24(b)
- Savings / FD interest under 80TTA or 80TTB
- 80G donation receipts with registration number
- Old regime selected before filing the ITR
Old vs New Regime — Which Saves You More?
The new tax regime is the default and offers lower slab rates plus a full rebate up to Rs 12 lakh taxable income (Budget 2025). The old regime wins only when your deductions are large. Compare before locking money into tax-saving investments.
Old regime — deductions allowed
- Full Rs 1.5 lakh 80C deduction
- 80D, 80CCD(1B), HRA, 24(b) interest all allowed
- Standard deduction Rs 50,000 (salaried)
- Best when total deductions are high
New regime (default) — few deductions
- No 80C, 80D, HRA or home-loan interest
- Only 80CCD(2) employer NPS & 80JJAA allowed
- Standard deduction Rs 75,000 (salaried)
- Rebate u/s 87A up to Rs 12L taxable income
- Simpler — best with few deductions
If your deductions (80C + 80D + home-loan interest + HRA) are modest, the new regime's lower rates, Rs 75,000 standard deduction and the Rs 12 lakh 87A rebate can beat the old regime even with no 80C at all. Run both numbers in our income-tax calculator before you invest.
Not sure which regime saves you more?
Compare regimes →How Much Tax Can You Actually Save?
Each deduction reduces taxable income, so the tax saved equals the deduction multiplied by your marginal slab rate (plus 4% cess). Here is the saving at the 30% slab for the two biggest levers.
80C + NPS maxed (30% slab)
Home loan 24(b) (30% slab)
Add Rs 25,000+ of health-insurance premium under 80D and any HRA exemption, and a 30%-slab taxpayer with a home loan can legitimately save well over Rs 1.3 lakh in tax. See our income-tax slabs for the rate that applies to you.
Tax-saving investments make sense if
- You are on the old regime with meaningful taxable income
- You already pay EPF, LIC premium or a home-loan EMI
- You want disciplined, tax-free long-term savings (PPF, SSY)
- The investment fits your goals, not just the deadline
Reconsider if
- The new regime saves you more overall
- You would lock money in only to save tax
- You need liquidity — most options have long lock-ins
- You are buying poor-return insurance just for 80C
What Still Saves Tax Under the New Regime
The new regime removes most deductions, but a few reliefs survive — and Budget 2025 made it far more attractive for middle incomes:
- Standard deduction of Rs 75,000 for salaried employees and pensioners
- Employer NPS contribution under Section 80CCD(2) — up to 14% of basic for government employees, 14% for private-sector employees in the new regime
- Section 87A rebate — no tax up to Rs 12 lakh taxable income (Rs 12.75 lakh for salaried, with standard deduction)
- Revised, wider slabs and higher TDS/TCS thresholds announced in Budget 2025
The employer-NPS deduction under 80CCD(2) is a percentage of basic salary and the limits differ between the old and new regime and between government and private employers. Confirm the applicable percentage for your case before relying on it — see incometax.gov.in.
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