Income Tax Deductions in India: 80C to 80G, Numbers First

Section 80C in Detail

Section 80C is the most widely used tax deduction in India, and also one of the most misunderstood. Many people make 80C investments in a rush in January or February, locking money into products they don't fully understand, just to "save tax." The result is portfolios cluttered with insurance-investment hybrids, long lock-ins for small benefits, and liquidity tied up in the wrong instruments. Used intelligently, 80C lets tax saving and financial planning point in the same direction.

What Section 80C Does

Section 80C of the Income Tax Act allows you to deduct up to ₹1,50,000 from your gross total income in a financial year. This reduces the amount of income on which you pay tax.

Example:

• Gross total income: ₹9,00,000
• 80C investments: ₹1,50,000
• Taxable income: ₹7,50,000

If you're in the 20% bracket, ₹1.5 lakh in 80C deductions saves ₹30,000 in tax. If you're in the 30% bracket, the saving is ₹45,000.

The deduction requires no special process: you declare your 80C investments in your ITR filing. Salaried employees can also provide proof to their employer to have TDS reduced throughout the year.

A note on the section number. The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026, and it renumbers this deduction: for FY 2026-27 (AY 2027-28) onwards, what everyone calls 80C sits in Section 123 read with Schedule XV. The ₹1.5 lakh ceiling, the eligible list and the old-regime-only restriction are all unchanged. Employers, banks and fund houses still print "80C" on their certificates, so this guide keeps that name.

What Qualifies Under 80C

The list is longer than most people realise, and it covers both investments and expenses you may already be paying.

Investment products. Small savings rates (PPF, NSC, SCSS, SSY) are reset every quarter. The figures below are the July–September 2026 rates, which the Finance Ministry left unchanged for the ninth quarter running. Check the current quarter's notification before you rely on them.

ELSS (Equity Linked Savings Scheme): Mutual fund schemes that invest primarily in equities and come with a mandatory 3-year lock-in. Among the most efficient 80C instruments: potentially higher returns than other options, the shortest lock-in among tax-saving instruments, and the ability to build long-term wealth. Monthly SIP into an ELSS counts toward 80C (each SIP instalment starts its own 3-year lock-in).

PPF (Public Provident Fund): Government-backed savings with a 15-year lock-in, currently earning 7.1% per annum, a rate unchanged since the April–June 2020 quarter. EEE status: contribution, accumulation, and maturity are all tax-free. Partial withdrawal permitted from year 7. Safe, but illiquid. Annual contribution minimum ₹500, maximum ₹1.5 lakh. The PPF guide covers partial withdrawals and when it fits.

EPF (Employee Provident Fund): Your employee contribution to EPF (12% of basic salary) qualifies for 80C. Voluntary additional contributions (VPF) also qualify. This is often the largest 80C claim for salaried employees and requires no additional investment decision; it's already happening automatically, and your salary slip shows how much of the limit it occupies. The employer's EPF contribution is not taxed in the employee's hands under most conditions.

NPS (National Pension System), Tier I: Your own contributions to NPS Tier I count within the same ₹1.5 lakh ceiling (through Section 80CCD(1)), and additionally an extra ₹50,000 is available under 80CCD(1B), which is separate from and additional to the 80C ceiling. Lock-in until retirement, or 15 years for All Citizen accounts (with partial withdrawal exceptions). The NPS section below covers all three NPS deductions and how the corpus is taxed at exit.

ULIP (Unit Linked Insurance Plan): Insurance products with investment components. Qualify for 80C if premium paid is up to 10% of the sum assured. Lock-in is 5 years. Generally not recommended for pure tax saving: the cost structure often makes them less efficient than separating insurance (term plan) and investment (ELSS).

Tax Saving Fixed Deposit: Bank FDs with a 5-year lock-in qualify for 80C. Interest is taxable (unlike PPF). Returns are currently around 6.5–7.5% per annum (varies by bank). Safe and liquid after 5 years. No premature withdrawal allowed during lock-in.

Sukanya Samriddhi Yojana (SSY): For girl children below age 10. Contributions qualify for 80C. Currently earning 8.2% per annum, joint-highest among small savings schemes alongside SCSS. The account matures 21 years from the date it is opened. EEE status: fully tax-free at all stages.

Senior Citizens Savings Scheme (SCSS): Only for those aged 60 or above. Quarterly interest payouts (currently 8.2% per annum). 5-year tenure, extendable by 3 years. Interest is taxable. Contributions qualify for 80C.

NSC (National Savings Certificate): Post Office scheme, 5-year lock-in, currently earning 7.7% per annum. Interest is compounded but paid on maturity. Each year's accrued interest (except the final year) also qualifies for 80C deduction. Useful for those who want safety without a 15-year lock-in.

Non-investment expenses. These expenditures also qualify for 80C, and many people don't realise they count without any additional investment:

Home Loan Principal Repayment: The principal component of your home loan EMI qualifies for 80C. The interest component qualifies separately under Section 24(b). If your EMI is ₹50,000 and the principal portion is ₹15,000 in the early years, that ₹15,000 goes toward your 80C limit.

Stamp Duty and Registration on Property: Paid in the year of property purchase, these qualify under 80C. This is a one-time benefit in the year of purchase.

Children's Tuition Fees: School and college tuition fees paid for up to two children qualify for 80C. This must be tuition fees: development fees, admission fees, hostel or boarding charges, and transport fees do not qualify. Only for full-time courses at Indian institutions.

Life Insurance Premium: Premiums paid on life insurance policies for yourself, spouse, and children qualify, provided the premium is up to 10% of sum assured (policies issued after April 2012). This includes term plans, endowment plans, and whole life plans, but not the investment component of ULIPs (that's handled separately).

What Does Not Qualify Under 80C

Expensive mistakes to avoid:

• Any 80C claim under the new tax regime: 80C is only for the old regime, so money locked away for it there buys a benefit you won't actually receive
• Health insurance premiums (those go under 80D)
• Principal repayment on home loan before completion certificate (under construction)
• Provident Fund contributions above the statutory limit for self-employed
• NSC accrued interest in the final year of maturity

The ₹1.5 Lakh Ceiling: How to Think About It

The ₹1.5 lakh 80C ceiling means all 80C instruments combined cannot give you a deduction beyond ₹1.5 lakh. There's no benefit to investing ₹2 lakh in ELSS; the extra ₹50,000 doesn't give an additional deduction.

Check your EPF first. Most salaried people with moderate to good incomes are already contributing ₹50,000–1,50,000 annually to EPF through salary deductions. This is your starting point: you may need to invest far less in additional 80C instruments than you think. If your basic salary is ₹40,000/month, your annual EPF contribution is ₹57,600, leaving approximately ₹92,400 of 80C headroom for additional investments. If your basic is ₹1,25,000/month, the EPF contribution alone may fill most or all of the ₹1.5 lakh ceiling.

Calculate available 80C headroom: ₹1,50,000 − Annual EPF employee contribution − Tuition fees paid − Home loan principal portion = Remaining 80C to fill

Choosing the Right Instruments

For most investors under 50 years old:

Avoid:

• ULIPs: high costs, complex structures; buying term + ELSS separately is almost always better
• Endowment/money-back policies solely for 80C: the insurance component is expensive and the returns are low
• Multiple tax-saving FDs without considering that interest is taxable

If you have very long goals (15+ years): PPF is excellent. The 15-year lock-in is less of a problem if the goal is retirement or a child's education.

If you want flexibility: ELSS with a 3-year rolling lock-in gives you the most liquidity among 80C instruments while maintaining equity upside.

In the old regime, filling the ₹1.5 lakh 80C limit (say EPF ₹50,000, ELSS ₹50,000, PPF ₹50,000) saves ₹46,800 in tax at the 30% slab, cess included. But buying an endowment policy purely for the deduction can lock you into 4–5% returns for 15 years. The deduction is not worth a bad product.

Jay's operating note: 80C should be filled with things you'd own anyway (EPF, a term plan, ELSS), not products that get sold to you every February.

Why ULIPs Are Almost Never the Best 80C Instrument

ULIPs (Unit Linked Insurance Plans) are frequently pushed at the January investment rush. They qualify for 80C (premium up to 10% of sum assured), but the economics are usually poor:

ULIP cost structure:

• Year 1 premium allocation charge: 5–25% of premium (varies by product)
• Policy administration charge: ₹100–500/month
• Fund management charge: 1.35% per annum (regulatory cap)
• Mortality charge: varies by age (increases every year)

Compare to ELSS:

• No entry load
• Fund management expense: 0.5–1.5% per annum (for direct plans, lower)
• No mortality charge
• 3-year lock-in vs ULIP's mandatory 5-year lock-in

A ₹1.5 lakh ULIP premium in Year 1 where 15% is the allocation charge: only ₹1,27,500 is actually invested. The ₹22,500 charge is gone. Your break-even on returns requires significantly higher gross returns than an equivalent ELSS investment.

The separation principle: buy term insurance separately (cheap, transparent, pure coverage); invest in ELSS or PPF separately (transparent, purpose-built investment vehicles). ULIPs bundle these suboptimally. Term insurance explains how much cover to buy on its own.

The only case for ULIPs: some older products with low charges and long tenures, held by people who really needed the combination. For new investors today, the case is very difficult to make.

EPF Voluntary Provident Fund (VPF): The Underused 80C Top-Up

Voluntary Provident Fund allows employees to contribute more than the statutory 12% EPF contribution. VPF contributions:

• Earn the same EPF interest rate (8.25% for FY 2025-26, the third year running at that rate; EPFO has not yet declared the FY 2026-27 rate)
• Are fully qualifying under 80C (within ₹1.5L limit)
• Are tax-free on maturity (EEE status, same as EPF)
• Are deducted directly from salary

VPF is a superior alternative to a tax-saving FD for the portion of 80C not used by EPF:

• Tax-saving FD interest is taxable; VPF/EPF interest is tax-free
• VPF rate (8.25%) > most tax-saving FD rates (6.5–7.5%)
• VPF has the same EEE treatment as EPF

How to set up VPF: Submit a written request to your employer/HR specifying the additional percentage or amount you want deducted from salary and credited to your EPF account. It can be set up at the start of any financial year.

The only downside: like EPF, VPF is relatively illiquid: withdrawal before 5 years of service triggers tax on the withdrawal.

Timing Your 80C Investments

Don't wait until January–March. The rush to invest in the last quarter leads to lump-sum investments in whatever is easily available, often ULIPs pushed by agents or ELSS funds chosen without research.

For ELSS: Start a monthly SIP in April, at the beginning of the financial year. ₹12,500/month adds up to ₹1.5 lakh by March. This also rupee-cost-averages across market levels.

For PPF: April 1–5 deposits maximise the return for that year (interest is calculated on the minimum balance between the 5th and last day of the month, so depositing before the 5th of April ensures 12 months of interest for that year).

Claiming 80C When Filing ITR

Under the old regime, 80C deductions are claimed in Chapter VI-A of your ITR. You declare the amounts under each eligible category. You are not required to attach investment proofs at the time of filing, but you must be able to produce them if asked.

Maintain a folder of:

• ELSS fund statements
• PPF passbook or statement
• Life insurance premium receipts
• Children's school fee receipts
• Home loan certificate from bank (showing principal and interest split)

The amount you declare must match what you actually invested. Claiming more than you invested is tax fraud.

Section 80C, used correctly, is one of the most reliable ways to reduce tax liability for salaried Indians. Used mindlessly, by buying whatever the nearest insurance agent recommends in February, it can create unnecessary lock-ins and poor returns that cost far more than the tax saved.

Tax Saving Beyond 80C

80C is not the limit of what is possible. The Income Tax Act offers a whole set of deductions that sit entirely outside the 80C ceiling. Used together, they can reduce your taxable income by several lakhs, yet they are routinely forgotten because they live in sections most people have never heard of.

The first is NPS: its extra deduction under 80CCD(1B), added to a full 80C, gives ₹1,50,000 + ₹50,000 = ₹2,00,000 in investment-based deductions: a ₹60,000 annual tax saving at the 30% bracket from these two sections alone. After NPS come health insurance under 80D, home loan interest, rent, through HRA or 80GG, education loan interest, savings and deposit interest, donations under 80G and the disability and medical deductions, each in its own section below.

NPS Deductions: 80CCD(1), 80CCD(1B) and 80CCD(2)

The National Pension System is often pitched purely as a tax-saving product, and while it is far more than that (it is a real retirement vehicle), its tax treatment is both attractive and confusing. The confusion comes from the fact that NPS offers not one but three distinct deductions, each under a sub-section of Section 80CCD, each with its own limit and its own quirks. Most people use only one of them and leave the others on the table. Worse, the rules differ between the old and new tax regimes, so advice that applied two years ago may now be wrong.

Three Deductions, One Section

All NPS tax benefits live under Section 80CCD, split into three sub-sections:

The structural point to hold on to: 80CCD(1) and 80C share the same ₹1.5 lakh pool, while 80CCD(1B) is a separate ₹50,000 on top, and 80CCD(2) is entirely separate again and tied to your employer. Let us take each in turn.

80CCD(1): Your Contribution Within the ₹1.5 Lakh Limit

Section 80CCD(1) covers your own contribution to NPS Tier I, whether you are an employee or self-employed. But it does not give you new room: it shares the overall ₹1.5 lakh ceiling that also includes 80C investments such as EPF, PPF, ELSS, life insurance premiums, and home loan principal.

So if you have already exhausted ₹1.5 lakh through EPF and other 80C instruments, your NPS contribution under 80CCD(1) gives you no further deduction. It only helps if you have unused space within that ₹1.5 lakh.

For salaried employees, 80CCD(1) is limited to 10% of salary (basic + DA). For the self-employed, it is up to 20% of gross total income. But the binding constraint for most people is the ₹1.5 lakh combined ceiling.

Because it sits inside the crowded ₹1.5 lakh pool, 80CCD(1) is rarely the reason people choose NPS. The real attraction is the next sub-section. How the ₹1.5 lakh limit is shared across instruments is set out under What Qualifies Under 80C.

80CCD(1B): The Extra ₹50,000

Section 80CCD(1B) is the headline NPS benefit, and the most valuable forgotten deduction. It allows an additional deduction of up to ₹50,000 for your own NPS contribution, over and above the ₹1.5 lakh 80C ceiling.

This is valuable because it is one of the very few legal ways to deduct beyond the ₹1.5 lakh limit in the old regime. A taxpayer who has already filled 80C with EPF and ELSS can invest a further ₹50,000 in NPS and deduct it: stack it on top of a fully used 80C and you get ₹2 lakh of deduction in total.

The important rule: a given rupee can be claimed under only one head. Money you claim under 80CCD(1B) cannot also be counted in your ₹1.5 lakh 80C. The efficient sequence is:

1. Fill your ₹1.5 lakh 80C limit first (often EPF alone does much of this).
2. Then put up to ₹50,000 of NPS into 80CCD(1B) for the extra deduction.

At a 30% marginal rate, that ₹50,000 deduction saves ₹15,000 plus cess every year, a clean, repeatable benefit. The lock-in (until 60, or 15 years for All Citizen accounts) makes NPS unsuitable as a liquid savings tool, but as a dedicated retirement deduction it is hard to beat.

Important regime caveat: Both 80CCD(1) and 80CCD(1B) are available only in the old tax regime. If you have chosen the new regime, neither applies, so weigh this in your regime decision.

80CCD(2): The Employer Route, and the New Regime Star

Section 80CCD(2) is for your employer's contribution to your NPS account. It is a deduction in your hands for the amount your employer puts in, and it is the most powerful NPS benefit for two reasons.

First, the limit is generous. For FY 2026-27, the deduction for an employer's NPS contribution is up to 14% of your salary (basic + DA) where the employer is the Central or a State Government, and up to 14% for any employer where your income is taxed under the new regime. Only one case still sits at 10%: a non-government employer's contribution where you are on the old regime. Earlier the 14% rate was reserved for government employees; extending it to private-sector employees on the new regime harmonised the two. It is not counted within your 80C or 80CCD(1B) limits either: it sits outside the ₹1.5 lakh 80CCE ceiling that caps employee contributions.

Second, and most importantly, 80CCD(2) is the only NPS deduction available in the new tax regime. While your own contributions get no relief in the new regime, your employer's contribution under 80CCD(2) is fully deductible. This makes it the single most relevant NPS lever for the large and growing number of taxpayers on the new regime.

The catch is that 80CCD(2) requires your employer to actually contribute to NPS on your behalf, which usually means restructuring your salary so that a portion (up to 14% of basic + DA) flows as an employer NPS contribution. Many companies offer this as part of a flexible benefit plan, and because the deduction works in either regime, restructuring into employer NPS is a rare overlap. For those exploring it, our guides on salary restructuring and NPS for salaried employees go deeper.

Worked Example: Stacking All Three NPS Deductions

Take an IT professional in Pune in FY 2026-27, considering the old regime:

• Salary (basic + DA): ₹12,00,000
• EPF (employee): ₹1,44,000 (already in 80C)
• Own NPS contribution: ₹50,000
• Employer NPS contribution: ₹1,20,000 (10% of basic+DA, which his employer offers)

80C / 80CCD(1): EPF ₹1,44,000 fills most of the ₹1.5 lakh limit. There is ₹6,000 of headroom left, which a small slice of NPS could fill, but for clarity assume 80C is effectively used up at ₹1,50,000.

80CCD(1B): The ₹50,000 own NPS contribution goes here in full = ₹50,000 deduction (over and above the ₹1.5 lakh).

80CCD(2): His employer's ₹1,20,000 contribution is deductible (within 10% of ₹12,00,000 = ₹1,20,000, so fully allowed) = ₹1,20,000 deduction.

Total NPS-related shelter:

So beyond the standard ₹1.5 lakh 80C, NPS lets him deduct an additional ₹1,70,000. At his 30% marginal rate, that is roughly ₹51,000 plus cess saved in a single year, purely from the NPS structure. You can model the full tax impact under both regimes before deciding which to file under.

Note: had he chosen the new regime, the ₹50,000 under 80CCD(1B) and the 80C portion would vanish, but the ₹1,20,000 employer contribution under 80CCD(2) would still be deductible, and under the new regime the employer-contribution limit rises to 14% of salary, allowing up to ₹1,68,000.

Tier I vs Tier II: Only One Gets the Tax Break

NPS has two account types, and the distinction is essential because only one carries tax benefits:

Tier I is the main retirement account. It is mandatory to open, has restricted withdrawals before retirement, and is the account that qualifies for all three deductions: 80CCD(1), 80CCD(1B), and 80CCD(2). When people talk about NPS tax benefits, they mean Tier I.

Tier II is a voluntary, flexible savings account with no withdrawal restrictions. Contributions to Tier II by ordinary subscribers carry no tax deduction and no exit tax benefits; it behaves more like an ordinary investment account. (A specific exception exists for certain government employees with a lock-in, but for the typical private investor, Tier II gives no deduction.)

The practical takeaway: route your tax-saving NPS contributions into Tier I. Contributing to Tier II expecting a deduction is a common and disappointing mistake.

Partial Withdrawals and the Self-Employed

Partial withdrawals before retirement: NPS allows limited partial withdrawals from Tier I for specified purposes such as a child's higher education or marriage, buying or building a house, or medical treatment and hospitalisation (no longer only specified illnesses), subject to conditions on how long you have been subscribed and a cap on the percentage you can take. Such partial withdrawals (up to the prescribed limit of your own contributions) are exempt from tax, which makes NPS more flexible than it first appears for genuine emergencies.

Self-employed subscribers: NPS is not only for the salaried. A self-employed person can claim 80CCD(1) up to 20% of gross total income (within the overall ₹1.5 lakh ceiling) and the additional ₹50,000 under 80CCD(1B), both in the old regime. What the self-employed cannot use is 80CCD(2), because that requires an employer contribution and there is no employer. So for a freelancer or business owner, the practical NPS benefit in the old regime is up to ₹2 lakh (₹1.5 lakh shared with 80C plus the extra ₹50,000). If you have side income alongside a salary, this interacts with your advance tax planning too.

How NPS Is Taxed at Maturity

The deductions above are only half the story. NPS is taxed lightly at exit too:

• At retirement (age 60): Up to 60% of the corpus comes out as a lump sum completely tax-free; All Citizen and corporate subscribers can take up to 80%, but the slice above 60% is taxable.
• At least 20% (40% for government employees) must be used to buy an annuity (a pension product from an insurer). The lump sum used to buy the annuity is not taxed at purchase.
• The pension you subsequently receive from the annuity is taxable as income in the year of receipt, at your slab rate.

So the structure is: tax deduction going in, tax-free lump sum of up to 60%, and a taxable pension stream from the mandatory annuity. This "EEE-ish" treatment (the lump sum up to 60% of the corpus is effectively exempt) is part of what makes NPS attractive for retirement.

NPS rewards those who understand its three doors. Use 80CCD(1) only to mop up unused 80C space, treat 80CCD(1B) as the truly extra ₹50,000, and chase 80CCD(2) through your employer, especially if you are on the new regime, where it is the only NPS benefit left. Combine them well and NPS becomes one of the most efficient retirement-and-tax tools available to a salaried Indian. It also locks money up until retirement with mandatory annuitisation, so weigh that trade-off with a CA or investment adviser before committing a large share of your deductions to it.

Common NPS Mistakes

Claiming the same contribution under two heads. You cannot count the same ₹50,000 under both 80CCD(1) (the ₹1.5 lakh pool) and 80CCD(1B). Each rupee goes to one head only. The smart order is to fill 80C first, then route the next ₹50,000 to 80CCD(1B).

Expecting own-contribution benefits in the new regime. Many taxpayers on the new regime contribute to NPS personally expecting a deduction; there is none under the new regime for 80CCD(1) or 80CCD(1B). In the new regime, only the employer's 80CCD(2) contribution is deductible.

Ignoring the employer route entirely. 80CCD(2) is the most powerful and most overlooked NPS benefit, precisely because it requires arranging an employer contribution. Salaried people who never ask their HR about it miss the one NPS deduction that works even in the new regime.

Assuming the whole maturity corpus is tax-free. Only 60% of the corpus is tax-free as a lump sum; anything withdrawn above that is taxable. The annuity produces a taxable pension. Planning your retirement cash flow on the assumption that all of NPS is tax-free will overstate your post-tax income.

Confusing the NPS limits with the 80C limit. 80CCD(1B)'s ₹50,000 is separate from the ₹1.5 lakh and fully additional, yet many people never claim it. Treating NPS as just another item competing inside the ₹1.5 lakh pool throws away its main advantage.

Section 80D: Health Insurance

Health insurance is one of the few expenses where protecting your family and reducing your tax bill point in exactly the same direction. Section 80D rewards you for buying medical cover, and the amounts involved are not trivial: a well-structured claim can shave ₹15,000 to ₹30,000 off your tax in a single year.

What Section 80D Covers

Section 80D allows a deduction for money spent on health insurance premiums, preventive health check-ups, and, for senior citizens without insurance, actual medical expenditure. The deduction reduces your gross total income before tax is calculated, much like Section 80C does for investments. It is entirely separate from your other deductions: it does not eat into your ₹1.5 lakh 80C limit, nor your home loan interest deduction.

The people who can be covered fall into two groups:

• Self, spouse, and dependent children, your own family unit.
• Parents, covered under a separate limit, whether or not they are financially dependent on you.

Each group has its own ceiling, and the ceilings depend on age. The single most important rule to internalise: the limit jumps when the person being insured is 60 years or older (a "senior citizen" for tax purposes).

Old regime only. This is the single biggest trap. Section 80D, like 80C, HRA, and home loan interest, is not available under the new tax regime, so before you count on an 80D deduction, you need to be sure the old regime is right for you. The regime section below shows why a large deduction stack does not settle that on its own.

The 80D Limits

Here is the complete limit structure. Note that the preventive check-up figure is a sub-limit that sits inside the main number, not on top of it.

Combining the rows tells you the headline maximum:

• You are below 60, parents below 60: ₹25,000 + ₹25,000 = ₹50,000
• You are below 60, parents are seniors: ₹25,000 + ₹50,000 = ₹75,000
• You are a senior, parents are seniors: ₹50,000 + ₹50,000 = ₹1,00,000

The ₹1 lakh figure is the absolute ceiling under Section 80D, available when both you and your parents are 60 or above. For a 30%-slab taxpayer, the parents' ₹50,000 alone saves ₹15,000.

The preventive check-up clarified: Within each group's limit, up to ₹5,000 can be spent on preventive health check-ups: a master health package, blood tests, a cardiac screening. If your family premium is ₹22,000 and you spend ₹5,000 on check-ups, you can claim ₹25,000 (the premium plus check-up, capped at the limit). But if your premium alone is already ₹25,000, the check-up does not add anything, because you have hit the ceiling.

The Senior Citizen Medical Expenditure Rule

There is a lesser-known but valuable provision for very senior parents who have no health insurance at all. If a senior citizen (60+) is not covered by any health insurance policy, you can claim their actual medical expenditure up to the ₹50,000 limit instead of premiums.

This matters because many people in their 80s simply cannot get a fresh health policy, or the premium becomes prohibitive. Their medical bills (doctor consultations, medicines, hospitalisation not otherwise reimbursed) can be claimed under 80D up to ₹50,000, provided no insurance premium is being claimed for them in the same year. Payment for these expenses must be in a non-cash mode to qualify.

Worked Example: A Family With Senior Parents

Let us put numbers on this. Say a 38-year-old in Bengaluru is on the old tax regime and has the following health-related spends in FY 2026-27:

• Family floater for himself, his wife, and two children: premium ₹24,000
• Preventive health check-up for the family: ₹4,000
• Health insurance premium for his parents, both aged 66: ₹46,000
• A master health check-up for his father: ₹3,000

Step 1, self/family group (limit ₹25,000, all below 60): Premium ₹24,000 + check-up ₹4,000 = ₹28,000, but capped at ₹25,000. Of the ₹4,000 check-up, only ₹1,000 is effectively used before the cap bites, but the simpler way to see it is: he claims ₹25,000.

Step 2, parents group (limit ₹50,000, both seniors): Premium ₹46,000 + check-up ₹3,000 = ₹49,000, which is within the ₹50,000 limit. The check-up of ₹3,000 is within the ₹5,000 sub-limit, so the full ₹49,000 counts. He claims ₹49,000.

Total 80D deduction = ₹25,000 + ₹49,000 = ₹74,000.

If he is in the 30% tax slab, this deduction saves him roughly ₹74,000 × 30% = ₹22,200, plus 4% cess, about ₹23,088 in tax. For a 20%-slab taxpayer, the saving would be around ₹15,392. That is a genuine, repeatable annual benefit for cover he should be buying regardless.

What Is and Is Not Covered Under 80D

Knowing the boundaries prevents disallowed claims. Eligible under 80D:

• Premiums for health/mediclaim policies and family floaters
• Premiums for critical illness riders and standalone health policies
• Top-up and super top-up health insurance premiums
• Preventive health check-ups (up to ₹5,000, within the limit)
• Government health scheme contributions (such as CGHS) for the relevant group
• Actual medical expenditure for uninsured senior citizens (up to ₹50,000)

Not eligible under 80D:

• Life insurance premiums, which belong under Section 80C, not 80D
• The health component of a combined life-cum-health product is generally not 80D-eligible unless separately a health policy
• Premiums for parents-in-law
• Premiums paid in cash (except the preventive check-up)
• Premiums for siblings, grandparents, or other relatives: only self, spouse, children, and parents count

A frequent error is to lump a life insurance premium into the 80D claim. Keep the two sections distinct: term and endowment life cover go under 80C; medical cover goes under 80D.

Only premiums for genuine health insurance policies with appropriate coverage qualify. Keep the premium payment receipts, the policy documents and the insurer's certificate, which usually states the 80D-eligible amount explicitly.

Individual Policies vs Family Floater

A practical question: should you buy one family floater covering everyone, or separate individual policies? For 80D, both work, but the limits apply by who is insured, not by how many policies.

If a single family floater covers you, your spouse, and children, its premium counts toward your ₹25,000 (or ₹50,000 if you are a senior) self-and-family limit. A separate policy for your senior-citizen parents counts toward their ₹50,000 limit. You do not get extra deduction simply by splitting into multiple policies within the same group; the group's ceiling is fixed.

Where splitting does help is when parents are seniors: keeping their cover in a separate policy makes it obvious that their ₹50,000 limit is being used, and avoids a single floater premium being capped at your lower self-and-family limit. Many families therefore keep a floater for the working household and a dedicated senior-citizen policy for the parents, both for better coverage and cleaner 80D claims.

Can an HUF Claim 80D?

Yes. A Hindu Undivided Family (HUF) can also claim Section 80D for health insurance premiums paid for any of its members, up to ₹25,000 (or ₹50,000 if the member insured is a senior citizen). This is a separate claim from the individual claims of the family members in their personal returns. For families that operate an HUF as a distinct tax entity, this is an additional, often-overlooked bucket of 80D deduction. The same non-cash payment rule applies.

Common 80D Mistakes

Paying the premium in cash. Health insurance premiums paid in cash do not qualify for 80D. Use net banking, UPI, card, or auto-debit. The only cash-friendly item is the preventive check-up.

Forgetting the parents' limit. The most common under-claim. People insure their parents but only claim within their own ₹25,000 bucket. The parents are a separate limit: up to ₹50,000 if they are seniors.

Assuming the check-up is extra. The ₹5,000 preventive check-up is inside the limit, not on top of it. Do not expect ₹25,000 premium plus ₹5,000 check-up to give you ₹30,000.

Claiming parents-in-law. Premiums for your spouse's parents do not qualify. Only your own parents count.

Claiming the full multi-year premium at once. A lump-sum premium for a multi-year policy must be spread proportionately across the years of cover, subject to the annual limit each year.

Double-counting employer-reimbursed amounts. If your employer reimburses part of a premium or a check-up, you cannot claim the reimbursed portion. Only your own out-of-pocket spend counts.

A word on timing and renewals. Because the deduction is tied to the year of payment, the date a policy is renewed matters. If a policy lapses and is renewed in the next financial year, the premium counts for that later year. Where a renewal straddles a year-end, the 31 March cut-off is what determines whether the premium falls in the current year. For multi-year policies, the proportionate spreading rule applies: the lump sum is divided across the years of cover, not claimed at once. Renewals set on auto-debit in a non-cash mode keep both cover and deduction uninterrupted.

Treating your deductions as a portfolio is the heart of sensible tax planning, and 80D is one of the easiest to forget because it overlaps so neatly with a purchase you would make anyway. Health insurance is protection first and a tax benefit second. But once you are buying the cover, claiming Section 80D properly is free money you have already earned, so claim every rupee the law allows. For which family members qualify in your specific situation, confirm with a CA rather than assuming.

Home Loan: Section 24(b) Interest and 80C Principal

A home loan gives access to two separate deductions.

Section 24(b), interest on home loan: The interest component of your home loan EMI qualifies as a deduction under Section 24(b), up to ₹2,00,000 a year for a self-occupied property. For a let-out or deemed let-out property there is no upper limit on the interest deduction (see tax on rental income), but loss from house property that can be set off against other income is subject to caps; verify current rules.

At the 30% slab, the full ₹2 lakh interest deduction saves about ₹62,400 with cess, often the single largest deduction a middle-income taxpayer claims.

To determine the interest component, obtain an annual home loan statement from your lender. It shows the principal repaid and interest paid separately for each financial year. This is required documentation at filing time.

Section 80C, principal repayment: The principal portion of your home loan EMI qualifies under Section 80C, contributing to the combined 80C limit. Combined with the interest deduction, a home loan is a substantial tax shield, detailed in our home loan tax benefits guide.

Important: under the new regime, neither the principal repayment nor the interest on a self-occupied home provides any deduction.

For first-time homebuyers, there may be additional deductions available on interest; verify eligibility at incometaxindia.gov.in under the relevant sections.

Rent: HRA Exemption, or Section 80GG Without HRA

HRA is not technically a deduction under Section 80; it is an exemption. But it functions as a significant reduction in taxable income for salaried employees who pay rent and receive HRA from their employer.

The three-part exemption calculation. HRA exemption is the minimum of:

1. Actual HRA received from employer
2. Actual rent paid minus 10% of basic salary
3. 50% of basic salary (for employees in metro cities: Delhi, Mumbai, Kolkata, Chennai) or 40% of basic (for non-metro cities)

This means the entire HRA is rarely fully exempt: the exemption calculation limits it based on actual rent, salary structure, and city.

Documentation required:

• Monthly rent receipts from landlord
• Rental agreement
• If total annual rent exceeds ₹1 lakh, landlord's PAN is required

Common errors:

• Claiming HRA while owning a home in the same city where you work (not generally allowed; verify current rules)
• Submitting fake rent receipts, which is documentation fraud with serious consequences
• Paying rent to spouse or certain relatives: subject to scrutiny, and the income must actually be taxable in the recipient's hands

Section 80GG: rent without HRA. What if you pay rent but your salary has no HRA component, or you are self-employed? You are not shut out. Section 80GG lets you claim a deduction for rent paid, subject to conditions, even without HRA.

The deduction is the least of: ₹5,000 per month (₹60,000 a year); 25% of your total income; or actual rent paid minus 10% of total income. You must not own a residential house at your place of work, and neither you, your spouse, nor your minor child should own a home in that city. You also file a simple declaration (Form 10BA) confirming the rent.

For a self-employed consultant paying ₹20,000 a month rent in a city where they own no home, 80GG can deliver up to ₹60,000 of deduction: modest, but entirely free relief that salaried-without-HRA and self-employed taxpayers routinely miss. If you do receive HRA, you claim the HRA exemption instead, using our HRA exemption calculator; you cannot claim both.

Education Loan Interest: Section 80E

Section 80E allows the entire interest on an education loan for higher studies to be deducted, with no upper limit. It is available under the old regime only, and it is one of the most valuable and most overlooked deductions for postgraduate degree borrowers.

Key features:

• The loan can be for your own higher education, your spouse's, your children's, or that of a student for whom you are the legal guardian
• It applies to higher education (post-secondary) at recognised institutions
• Only the interest qualifies, not the principal
• There is no upper limit on the interest amount that qualifies
• The deduction runs for up to eight years from the year repayment begins, or until the interest is fully paid, if earlier
• The loan must be from a recognised financial institution (bank or approved charitable institution), not from family members

For someone repaying a ₹20 lakh education loan at 10% interest, annual interest in the early years could be ₹2 lakh+. At the 30% slab, 80E saves ₹60,000+ annually for up to 8 years, potentially ₹4.8 lakh over the full deduction period. For families funding expensive degrees in India or abroad, this is a meaningful, uncapped relief that is frequently overlooked.

Savings and Deposit Interest: Sections 80TTA and 80TTB

Small but easy:

Section 80TTA (for individuals below 60): interest from savings bank accounts (with banks, co-operative banks, or post offices) is deductible up to ₹10,000 per year. This is specifically for savings account interest, not FD interest. So if your savings account earns ₹15,000 in interest, ₹10,000 is deductible under 80TTA and ₹5,000 is taxable.

Section 80TTB (for senior citizens, aged 60 or above): a broader deduction of up to ₹50,000 per year on interest from savings accounts and term deposits (FDs). It replaces 80TTA for senior citizens and is significantly more valuable. A senior citizen with ₹20 lakh in FDs earning 7.5% (₹1,50,000 interest) gets a ₹50,000 deduction under 80TTB, reducing taxable interest to ₹1,00,000.

Both 80TTA and 80TTB are available under the old regime only (80TTB is a high-value deduction that often makes the old regime worthwhile for senior citizens).

Section 80G: Donations

Giving to charity is generous on its own, but the tax law also rewards it. Section 80G lets you deduct part, sometimes all, of what you donate to approved funds and charitable institutions from your taxable income. The catch is that the rules are fiddlier than most people assume. The deduction is not always 100%, it is not always unlimited, and it is only available if you stay on the old tax regime.

What Section 80G Actually Allows

Section 80G provides a deduction from your gross total income for donations made during the financial year to specified funds, institutions, and charitable organisations. It sits in Chapter VIA of the Act, the same chapter as Section 80C and 80D.

Two threshold rules apply to everyone:

• Regime: Section 80G is not available under the new regime, the default since FY 2023-24. To claim 80G you must opt for the old regime, and the lost deduction may not be worth giving up the lower slab rates, so compare the two before you decide.
• Mode of payment: Donations made in cash above ₹2,000 are not eligible. Anything above that threshold must be paid by cheque, demand draft, UPI, card, or bank transfer. Donations in kind (clothes, food, medicines, laptops) get no deduction at all, regardless of value.

The Four Categories of Donations

This is the part that confuses most taxpayers. Section 80G donations are not all treated the same. They fall into four buckets, defined by two questions: what percentage is deductible (100% or 50%), and whether a qualifying limit applies.

The overwhelming majority of donations ordinary taxpayers make (to a registered NGO, a hospital trust, a school foundation, a temple or church with valid 80G registration) fall into Category 4: 50% deduction, subject to the qualifying limit. People assume the whole donation is deductible, which is why the actual refund often disappoints. Always check which bucket the institution falls into; the receipt and the institution's 80G approval letter or certificate state it.

The Qualifying Limit, Explained

For Categories 3 and 4, you cannot deduct unlimited amounts. The donations in those two categories are first capped at the qualifying limit, which is 10% of your adjusted gross total income. Only after applying that cap do you take 50% (or 100%) of the capped figure.

"Adjusted gross total income" for this purpose means your gross total income reduced by:

• Long-term capital gains
• Short-term capital gains taxed at special rates (such as equity STCG)
• Deductions already claimed under other sections of Chapter VIA (80C, 80D, etc.), excluding 80G itself
• Income on which tax is not payable

So the sequence is:

1. Compute adjusted gross total income.
2. Take 10% of it. This is your qualifying limit.
3. Add up your Category 3 and 4 donations. If they exceed the qualifying limit, cap them at the limit.
4. Apply the correct percentage (100% or 50%) to the capped amount.
5. Donations in Categories 1 and 2 are added on top and are not affected by the limit.

If that sounds abstract, the worked example below makes it concrete.

Worked Example: Two Donations, Two Categories

Take a salaried professional in Bengaluru on the old regime. For FY 2026-27 his numbers look like this:

• Gross total income: ₹14,00,000 (salary only, no capital gains)
• Deductions claimed under 80C: ₹1,50,000
• Deduction under 80D (health insurance): ₹50,000

During the year he donated:

• ₹40,000 to the PM National Relief Fund (Category 1: 100%, no limit)
• ₹1,20,000 to a registered education NGO with valid 80G approval (Category 4: 50%, with limit), all by bank transfer

Step 1, adjusted gross total income:

₹14,00,000 − ₹1,50,000 (80C) − ₹50,000 (80D) = ₹12,00,000

(We subtract the other Chapter VIA deductions but not 80G itself.)

Step 2, qualifying limit (10%):

10% × ₹12,00,000 = ₹1,20,000

Step 3, apply the limit to the Category 4 donation:

His Category 4 donation is ₹1,20,000, which is exactly equal to the qualifying limit, so the full ₹1,20,000 qualifies.

Step 4, apply the 50% rate:

50% × ₹1,20,000 = ₹60,000 deductible

Step 5, add the Category 1 donation in full:

The ₹40,000 to the PM National Relief Fund is 100% with no limit, so all ₹40,000 is deductible.

Total 80G deduction = ₹60,000 + ₹40,000 = ₹1,00,000

He donated ₹1,60,000 in total but can only deduct ₹1,00,000. At his 30% marginal rate, the actual tax saving is roughly ₹30,000 plus cess, around ₹31,200. The donation to the relief fund was far more tax-efficient than the NGO donation, even though the NGO received three times as much.

Had he donated ₹2,00,000 to the NGO instead of ₹1,20,000, his deduction would still have been capped: only ₹1,20,000 of it would qualify, then halved to ₹60,000. The extra ₹80,000 of generosity earns no extra deduction.

Documents You Need to Claim 80G

To survive any scrutiny, keep:

• A stamped receipt from the institution showing its name, address, PAN, the amount, and the donation date.
• The institution's 80G registration / approval number (it is usually printed on the receipt).
• For Category 1 and 2 funds, proof of the specific fund, such as a receipt naming the PM National Relief Fund.
• Your bank or UPI record showing the payment, since cash above ₹2,000 is disallowed.

The organisation must be registered under Section 80G, with an active registration, at the time of donation. Registrations lapse and must be renewed by the charity, and a donation to a lapsed registration doesn't qualify for deduction, so verify the registration at the Income Tax Department's online tool. Pre-2021, organisations that didn't re-register under the new Section 80G(5) framework had their registrations lapse, and many donors unknowingly claimed deductions for donations to organisations whose registrations had expired.

Institutions now file Form 10BD (a statement of donations received) with the tax department and issue you a Form 10BE certificate. The donation then flows into your Annual Information Statement, which the department uses to pre-fill and cross-verify your claim. If you claim a figure that does not match what the institution reported, you will likely get a notice. Treat the 10BE certificate as your primary proof. Storing all of these alongside the rest of your filing paperwork (see the tax document checklist) saves a scramble at filing time.

How to Report 80G in Your ITR

In the ITR forms (ITR-1 through ITR-4 as applicable), Schedule 80G asks you to enter donation details split by category. For each donation you typically provide:

• Name and PAN of the donee
• Address
• Amount donated (cash and non-cash split)
• The eligible deduction amount after applying the percentage and limit

The utility on the income tax portal computes the qualifying limit for Categories 3 and 4 once you enter the donations correctly, but only if you have classified each donation into the right category. Misclassification is the most common error.

80G Versus Other Charitable and Welfare Deductions

Section 80G is not the only charity-linked deduction, and people sometimes mix them up:

• Section 80GGA covers donations for scientific research or rural development. It is for taxpayers who do not have business income and overlaps in spirit with 80G but applies to specific approved institutions.
• Section 80GGC covers contributions to political parties or electoral trusts, which get a 100% deduction with no upper cap, but again only if paid by non-cash means. This is separate from 80G and reported in its own field.
• Section 80G itself is the broad charitable-donation provision and the one most individuals use.

Knowing which section a contribution belongs to matters, because each has its own schedule in the ITR and its own conditions. A donation to a political party is never claimed under 80G; it goes under 80GGC. Putting it in the wrong place is a frequent filing error that can hold up processing.

Why the Category of the Fund Matters More Than the Amount

A subtle but important planning point: from a pure tax-efficiency standpoint, where you donate often matters more than how much. A ₹50,000 donation to a Category 1 fund (100%, no limit) gives a full ₹50,000 deduction. The same ₹50,000 to a typical Category 4 NGO gives only ₹25,000, and even that ₹25,000 can be trimmed if you breach the 10% qualifying limit.

This does not mean you should only ever give to government relief funds. Charitable intent is personal, and the cause you care about should drive the donation. But if you are deciding purely on tax grounds how to split a fixed charity budget, front-loading Category 1 funds extracts the maximum deduction per rupee. Many donors give to both (a relief fund for the tax efficiency and a chosen NGO for the cause), and that is a perfectly reasonable approach.

Common 80G Mistakes

Assuming every donation gives 100% deduction. Most NGO donations are 50%, often further restricted by the qualifying limit. The headline figure on your receipt is the donation, not the deduction.

Donating cash above ₹2,000. Cash donations above ₹2,000 do not qualify under 80G. A ₹2,500 cash donation in the temple hundi is generous but earns zero deduction. Use UPI or a cheque for anything above ₹2,000, and keep the receipt.

Claiming donations in kind. Old clothes, blankets, food packets and used electronics may help people, but they do not qualify under 80G. Only money counts.

Donating to an institution without valid 80G approval. Not every charity is registered, and many small temples are not. Without a valid 80G approval and a receipt carrying the registration number, there is no deduction, so verify before you give if the tax benefit matters to you.

Forgetting the qualifying limit while planning. People time a large year-end donation expecting a big refund, then discover the deduction was capped at 10% of adjusted GTI. If tax efficiency is the goal, donate to Category 1 funds, which have no limit.

Ignoring the AIS mismatch. If the institution reported a different amount (or did not report at all), your claim is exposed. Reconcile your receipts against your AIS before filing.

Section 80G rewards giving, but only if you give the right way: digitally, to approved institutions, and with an eye on the category and the qualifying limit. Get those three things right and the deduction follows. For a large donation, confirm the institution's current 80G registration status and the applicable qualifying percentage with a CA before you give.

Disability and Medical Deductions: Sections 80DD, 80DDB and 80U

A cluster of deductions for medical hardship:

• Section 80DD, for expenses on the maintenance/medical treatment of a dependent with a disability: a fixed deduction of ₹75,000, rising to ₹1,25,000 for severe disability.
• Section 80DDB, for treatment of specified serious diseases (for self or a dependent), up to ₹40,000, or ₹1,00,000 for senior citizens.
• Section 80U, for a taxpayer who is themselves a person with a disability: ₹75,000, or ₹1,25,000 for severe disability.

These are not lifestyle deductions but genuine reliefs for families dealing with medical adversity, and they are widely under-claimed because people are unaware they exist.

How the Deductions Stack Up

Stacking the Full Deduction Set: Maximum Old Regime Savings

For a high-income individual who has all eligible deductions, here's the theoretical maximum old-regime deduction stack:

Someone earning ₹30 lakh with a home loan, paying significant rent in a metro, supporting elderly parents' health insurance, and repaying an education loan could have total deductions of ₹7–8 lakh. These are illustrative figures; run your own deduction stack past a CA before deciding which regime to file under.

Worked Example: ₹22 Lakh With Every Bucket Used

Take a 42-year-old earning ₹22,00,000 in Bengaluru who supports senior-citizen parents, has a home loan, and is repaying his daughter's education loan. He is on the old tax regime. Here is how his deductions stack:

His taxable income: ₹22,00,000 − ₹6,15,000 = ₹15,85,000.

Without anything beyond 80C and the standard deduction, his deductions would have been just ₹2,00,000 (₹1.5L + ₹50K standard), leaving ₹20,00,000 taxable. The extra ₹4,15,000 of deductions, all from sections beyond 80C, sits entirely in his 30% slab.

Tax saved by going beyond 80C: roughly ₹4,15,000 × 30% = ₹1,24,500, plus 4% cess: about ₹1,29,480 in tax, in a single year. On the old regime, that is the cost of stopping at 80C.

The Price I Put on a Deduction Before Chasing It

Deductions are where it is easiest to skip the arithmetic, because the tax saving usually arrives with a sales pitch attached. Before putting a rupee into anything for a tax break, this is the order I would work in.

1. Find the marginal rate that applies. Under the old regime the ladder is 5%, 20% and 30%. The same ₹1.5 lakh of 80C is worth ₹7,500 at 5% and ₹45,000 at 30%, so one product can be a fair deal for one person and a poor one for the next.
2. Count what is already filled. EPF, tuition fees, home loan principal and premiums you already pay take up room before you invest anything. The headroom formula in the 80C section does this in one line.
3. Price the lock-in, not just the saving. A tax saving arrives once, in the year you claim it. A lock-in lasts three, five or fifteen years. In business I learned to stop reading a profit on paper as cash in hand, and a tax saving deserves the same caution: it is only worth having if the money behind it would have been well placed anyway.
4. Check the regime before anything else. On the new regime most of these deductions simply do not exist. I would put the year's income through the new regime, then through the old one with only the deductions I could prove, with the site's income tax calculator doing the arithmetic, and only then decide what, if anything, to buy.

If a product would not earn its place without the tax break, the tax break will not rescue it.

Old or New Regime: Decide Before You Claim

None of this matters if you are on the new regime, where these deductions mostly vanish, so the regime choice comes before any claim. The new regime offers lower slab rates but strips out almost all deductions.

Do not assume a stack like that one makes the old regime cheaper. The example below has ₹5,93,000 of old-regime reductions on a ₹20 lakh salary (a full 80C, the extra NPS deduction, health cover for the family and senior-citizen parents, home loan interest and HRA), and the new regime still comes out about ₹51,584 cheaper. For a young earner with no loan and minimal investments, the new regime's lower rates usually win. Run both sets of numbers before committing, with the detailed old vs new tax regime guide alongside your own figures; the tax planning in India guide covers the full framework, including regime comparison and documentation timing.

Worked Example: ₹20 Lakh, Old Regime vs New

Take a 38-year-old on a ₹20 lakh gross salary, on the old regime, who has used every deduction open to him. All the tax below is computed on the FY 2026-27 (AY 2027-28) position: Budget 2026 retained the slabs, the ₹75,000 new-regime standard deduction and the ₹60,000 Section 87A rebate that Budget 2025 introduced:

Taxable income: ₹20L − ₹5,93,000 = ₹14,07,000

Tax on ₹14,07,000 (old regime):

• ₹2.5–5L: ₹12,500
• ₹5–10L: ₹1,00,000
• ₹10–14.07L: 30% × ₹4.07L = ₹1,22,100
• Total: ₹2,34,600 + 4% cess = ₹2,43,984

Compare with new regime (₹20L − ₹75K std deduction = ₹19.25L): Tax: ₹20K + ₹40K + ₹60K (on the ₹4–8L, ₹8–12L, ₹12–16L slabs) + 20% on ₹3.25L (₹16–19.25L) = ₹20K + ₹40K + ₹60K + ₹65,000 = ₹1,85,000 + cess = ₹1,92,400

Old regime saves: ₹0. The new regime actually wins here by about ₹51,584, despite ₹5.43L of deductions above the standard deduction (₹5,93,000 total less the ₹50,000 standard deduction).

Employer NPS (Section 80CCD(2)) would lower the tax further, but it is available in both regimes (and is more generous in the new regime, where the cap is 14% of basic versus 10% for a non-government employer on the old regime), so it does not flip the result. The new regime stays ahead at this income with this deduction set.

If employer NPS under new regime (14% = ₹1,12,000 deductible): new regime taxable becomes ₹19.25L − ₹1.12L = ₹18.13L. Tax drops significantly. New regime advantage grows.

The answer turns on the specific numbers, which is why running them every April matters.

The Deductions Still Available in the New Tax Regime

Most deductions covered above are exclusive to the old tax regime. But a few survive in the new regime, and these are worth knowing explicitly:

Standard deduction: ₹75,000 per year for salaried employees and pensioners. Budget 2024 raised it from ₹50,000, and it has stayed at ₹75,000 since, including for FY 2026-27. The old regime's standard deduction is still ₹50,000.

Section 80CCD(2), employer NPS contribution: the employer's contribution to NPS Tier I stays deductible, up to 14% of Basic+DA. It is specifically excluded from the prohibition on deductions in the new regime and is the most powerful tax-reduction lever available under it.

Gratuity exemption: Gratuity received from employer on retirement or termination is exempt up to specified limits (up to ₹20 lakh for covered employees). Available in both regimes.

Leave encashment on retirement: Exempt up to ₹25 lakh (for non-government employees) on retirement. Available in both regimes.

VRS compensation: Voluntary retirement compensation up to ₹5 lakh is exempt under Section 10(10C). Both regimes.

EPF corpus on maturity: Exempt if employee contribution is below ₹2.5 lakh/year and employment exceeds 5 years. Both regimes.

For most working-age salaried employees, the only new regime deduction that provides meaningful ongoing planning value is 80CCD(2) employer NPS. Everything else either requires exceptional circumstances or is a one-time event.

Why Documentation Is the Foundation of Deductions

The deductions above are only valid when the underlying transaction is genuine and documented. Each needs its own proof: statements, receipts or certificates for 80C investments, the NPS contribution receipt, the insurer's 80D certificate, the lender's interest certificate for home and education loans, the bank's interest summary, and the donee's stamped 80G receipt. Collect these through the year rather than hunting for them in July, and store them alongside your other records.

The Income Tax Department's Annual Information Statement (AIS) and Form 26AS aggregate financial data from banks, mutual funds, property registrars, and other sources. When you file your return, the department can cross-reference what you have declared with what was reported by third parties.

Deductions claimed without genuine transactions or without proper documentation create risk of:

• Notices under Section 143 for clarification
• Scrutiny assessment
• Disallowance of the deduction and resulting tax demand
• In serious cases, penalties for misrepresentation

A deduction without proof is like an inflated stock statement handed to a bank: it holds only until someone checks, and AIS and Form 26AS give the department the means to check.

At filing time, incorrect deduction claims are among the top reasons ITR submissions attract notices. The ITR filing mistakes guide covers the full checklist of what to verify before submitting.

A legitimate deduction, properly documented, should withstand any scrutiny. An undocumented or fabricated deduction creates problems that far exceed the original tax saving. The taxpayers who save the most are not the ones who know the most obscure section; they are the ones who claim every section they qualify for, with the paperwork to back it up.

The practical message: claim every deduction you are actually entitled to. Document every genuine transaction. Do not claim deductions for transactions that did not happen.

Where Deduction Claims Usually Go Wrong

Stopping at the ₹1.5 lakh 80C ceiling. The biggest miss. 80CCD(1B), 80D, 24(b), and 80E are all separate buckets. Treat 80C as a floor, not a cap.

Claiming these under the new regime. Almost all of them are old-regime only, 80C, 80D and 80G included: on the new regime the deduction is zero no matter how much you invested, paid or gave. Confirm your regime first.

Confusing education loan principal with interest. Only the interest qualifies under 80E; the principal does not.

Overlooking 80TTB for seniors. Senior citizens can shelter up to ₹50,000 of interest income but routinely forget to claim it.

Last-minute scrambling. Rushing in March to "save tax" leads to poor product choices, with the deduction chosen over the quality of the underlying investment. Plan these deductions across the year, not in the final week. That is the difference between tax planning and tax saving.

A Deduction Checklist for the Year

• The regime comes first: most of these deductions exist only under the old tax regime, so the two regimes are worth comparing on your real numbers before finalising.
• EPF counted first against the ₹1.5 lakh 80C limit, along with tuition fees and home loan principal.
• Any remaining 80C room filled with ELSS or PPF rather than endowment plans, with the total kept at or under ₹1.5 lakh and the investing done early in the year, not in a March panic.
• The ₹50,000 NPS contribution under 80CCD(1B) sits on top of the full 80C limit; suitability depends on your situation.
• Whether an employer offers NPS (80CCD(2)) is worth checking, since it is the one NPS deduction that also works in the new regime.
• The ages of everyone insured under 80D noted, since anyone 60 or above qualifies for the higher ₹50,000 limit.
• Self/family premiums and parents' premiums totalled separately, each capped at ₹25,000 or ₹50,000 by age, with preventive check-ups counted only up to ₹5,000 within each limit, up to ₹75,000 for self and senior parents together.
• Every premium paid by a non-cash mode, with receipts and the insurer's 80D certificate kept; for uninsured senior parents, medical-expense receipts up to ₹50,000 are an alternative claim.
• Home loan interest under 24(b) and education loan interest under 80E noted as separate buckets.
• For senior citizens, 80TTB covering savings and FD interest up to ₹50,000.
• Medical deductions (80DD, 80DDB, 80U) are relevant for some families.
• 80G donations above ₹2,000 made by cheque, UPI, card or bank transfer, with a receipt carrying the institution's PAN and 80G number; on pure tax efficiency, Category 1 funds give the most deduction per rupee, though the cause that matters to you naturally guides where a donation goes.
• Every donation matched against the AIS before filing, with the Form 10BE certificate kept; for large giving spread across many institutions, a quick consultation with a CA helps classify each donation correctly.
• Proofs organised with the tax document checklist well before filing, and each figure checked in the ITR's deduction schedule.
• Deductions revisited each financial year, and whenever you change jobs or regimes.

A simple review rhythm:

• Quarterly: track how much of the ₹1.5 lakh limit your EPF and existing SIPs have already filled, so nothing is left to a March scramble.
• Annually: re-compare old vs new regime on your real numbers, then route any remaining 80C room into ELSS or PPF rather than a product sold to you in February.

Section 80C is where tax saving starts, not where it ends. The deductions beyond it (NPS, health insurance, loan interest, donations and medical reliefs) are where serious savings live. The order I would follow is the same every year: the regime first, then the rupee value of each deduction at the marginal rate, then the paperwork. Claim every bucket you qualify for, and buy nothing just to fill one.

For personal tax or legal decisions, consult a qualified professional.