This guide explains the most commonly used tax-saving deductions under the Income-tax Act,
applicable for financial year 2025–26 (assessment year 2026–27). It is intended to
help you plan and ask the right questions — not to replace professional advice. Tax laws,
limits and eligibility conditions change, and their application depends on your individual
circumstances. Please verify the current provisions with a qualified chartered accountant or
tax professional before filing your return.
1. Old vs New Tax Regime — Which Applies?
Individuals can choose between the old regime (with deductions and exemptions) and the new
regime (lower slab rates, fewer deductions). The new regime is the default; you opt for the
old regime by indicating it in your ITR if it is more beneficial.
| Feature | Old Regime | New Regime |
|---|
| Slab rates | Higher, with wider bands | Lower, concessional |
| 80C / 80D deductions | Available | Not available |
| HRA / housing loan interest | Available (subject to conditions) | Not available |
| Standard deduction (salaried) | Available | Available |
| Best for | Those with sizeable investments & exemptions | Those with simpler finances / lower deductions |
Compare your tax outgo under both regimes before choosing. The old regime rewards structured
tax-saving investments; the new regime rewards simplicity. There is no universally “better”
option — it depends on your numbers.
2. Section 80C — Up to ₹1.5 Lakh
Available only under the old regime. Common eligible instruments include:
- Life insurance premium (for self, spouse, children)
- Public Provident Fund (PPF) — 15-year lock-in
- Equity-Linked Savings Scheme (ELSS) mutual funds — 3-year lock-in
- Employee Provident Fund (EPF) contributions
- National Savings Certificate (NSC), 5-year tax-saver FD
- Principal repayment on a home loan
- Sukanya Samriddhi Yojana (for a girl child)
The combined ceiling across all 80C instruments is ₹1.5 lakh per financial year.
ELSS and mutual fund investments are subject to market risks; past performance is not
indicative of future results and no returns are guaranteed.
3. Section 80D — Health Insurance Premium
Available only under the old regime. Deduction for premium paid on health insurance for self, family and parents:
| Covered members | Maximum deduction |
|---|
| Self, spouse & children | ₹25,000 (50,000 if senior citizen) |
| Parents (additional) | ₹25,000 (50,000 if senior citizen) |
| Preventive health check-up | Up to ₹5,000 (within the above limits) |
Premium must be paid by any mode other than cash to qualify. The check-up amount can be paid
in cash. Eligibility depends on the age of the insured members and the policy terms.
4. Section 80CCD(1B) — NPS, Extra ₹50,000
An additional deduction of up to ₹50,000 for contributions to the National
Pension System (NPS), over and above the 80C limit. This is available under the old regime;
under the new regime, employer NPS contribution up to 10% of basic salary is allowed under
Section 80CCD(2).
5. Section 10(10D) — Life Insurance Payout Taxability
Proceeds received on maturity or death of the insured are generally exempt under Section
10(10D), subject to conditions. For policies issued on or after 1 April 2012, exemption on
maturity proceeds applies only if the annual premium does not exceed 10% of the sum assured
(for policies issued on or after 1 April 2021, single-premium policies have specific rules).
- Death benefit proceeds are typically exempt regardless of premium.
- Maturity proceeds of ULIPs issued on/after 1 Feb 2021 are taxable if aggregate premium
exceeds ₹2.5 lakh per year.
- For traditional policies issued on/after 1 April 2023, maturity proceeds are taxable if
aggregate annual premium exceeds ₹5 lakh.
These thresholds and conditions are summarised for awareness only. Confirm the exact rule that
applies to your policy’s issue date and premium with a tax professional.
6. Quick Planning Checklist
- Calculate your taxable income under both regimes before committing.
- Maximise 80C with a mix that matches your horizon (PPF for safety, ELSS for growth).
- Use 80D for health cover for self and parents separately.
- Consider the extra ₹50,000 NPS deduction under 80CCD(1B).
- Keep all premium receipts and policy documents for filing.
- Review your plan each year — limits and slabs can change.
Need help choosing the right tax-saving investments?
Book a free, no-obligation consultation with Bappaditya Nath, AMFI-registered mutual fund
distributor (ARN-160554, EUIN E296974) and insurance consultant in Kolkata.
Chat on WhatsApp · +91 80011 12659
Disclaimer: This guide is for general awareness only and does not constitute
tax, investment or financial advice. Tax laws, deduction limits, eligibility conditions and
slab rates are subject to change by the Government of India. Mutual fund investments are
subject to market risks; past performance is not indicative of future results and no returns
are guaranteed or assured. Suitability depends on individual circumstances. Please read all
scheme-related documents carefully and verify the current provisions with a qualified tax
professional before making any decision. Insurance is the subject matter of solicitation.