Top 10 Tax-Saving Deductions Under the Old Regime for FY 2025-26

If you are in the old tax regime for FY 2025-26, deductions are your most powerful lever for reducing tax. The Income Tax Act offers more than a dozen deduction sections — but most taxpayers only know about Section 80C. Here is a comprehensive guide to all the major deductions you can claim, with limits, eligible instruments, and practical tips.

1. Section 80C — up to ₹1,50,000

The most widely used deduction. You can claim up to ₹1,50,000 per year across a range of qualifying investments and payments:

• ELSS mutual funds — equity-linked savings schemes; 3-year lock-in; market-linked returns
• Public Provident Fund (PPF) — 7.1% interest (tax-free), 15-year lock-in, partial withdrawal allowed after year 7
• Employee Provident Fund (EPF) — your 12% contribution counts toward 80C automatically
• National Savings Certificate (NSC) — 5-year lock-in, interest is taxable but also counts as re-investment under 80C
• Sukanya Samriddhi Yojana (SSY) — for girl child; best rate among small savings schemes; interest tax-free
• Life insurance premiums — paid for yourself, spouse, or children; term plans qualify
• Home loan principal repayment — the principal portion of your EMI counts toward 80C
• 5-year tax-saver bank FD — lock-in 5 years; interest is taxable
• Tuition fees — for up to 2 children, for full-time education in India

Tip: ELSS is the most popular choice among younger investors because it has the shortest lock-in (3 years) and the potential for equity-level returns, unlike the fixed-return instruments. However, ELSS returns are not guaranteed and are subject to market risk.

2. Section 80D — Health Insurance Premiums

Up to:

• ₹25,000 for premiums paid for yourself, spouse, and children
• ₹50,000 if you or your spouse is a senior citizen (60+)
• An additional ₹25,000 (or ₹50,000 if senior citizen) for parents' health insurance
• Maximum combined: ₹1,00,000 (if both you and your parents are senior citizens)
• ₹5,000 for preventive health check-up (included within the overall limit)

Tip: Even if your employer provides group health insurance, a separate personal family floater gives you additional deduction and better coverage continuity when you change jobs.

3. Section 24(b) — Home Loan Interest

If you have a home loan for a self-occupied property, you can deduct up to ₹2,00,000 of interest paid per year under Section 24(b). For a let-out property, the full interest (no cap) is deductible against rental income. If rental income is insufficient, up to ₹2L of the loss can be set off against other income.

Note: For a property under construction, interest during the construction period is deductible in 5 equal instalments starting from the year the construction is completed.

4. Section 80CCD(1B) — NPS Additional Deduction

An additional ₹50,000 deduction — over and above the ₹1.5L 80C limit — for contributions to the National Pension System (NPS). This is one of the most underused deductions in India. If you are in the 30% slab, ₹50,000 in NPS saves you ₹15,600 in additional tax (30% + cess).

NPS is a market-linked pension product. At retirement (60+), 60% of the corpus can be withdrawn tax-free; the remaining 40% must be used to buy an annuity (monthly pension). Early exit rules are restrictive.

5. Section 80CCD(2) — Employer NPS Contribution

If your employer contributes to your NPS account, you can deduct that contribution up to 10% of your basic salary + DA. This is not subject to the ₹1.5L cap of Section 80C or the ₹50,000 cap of 80CCD(1B). For high-salary individuals, restructuring salary to include a higher employer NPS contribution can provide significant tax-free income.

6. HRA Exemption — Section 10(13A)

If you live in rented accommodation and receive House Rent Allowance (HRA) as part of your salary, you can claim an exemption. The exempt amount is the minimum of:

• Actual HRA received from employer
• Actual rent paid minus 10% of basic salary
• 50% of basic salary (metro cities) or 40% of basic salary (non-metro)

Important: If your annual rent exceeds ₹1,00,000, you must provide your landlord's PAN. If you pay rent to a family member, maintain a proper rent agreement and bank transfer trail to support the claim.

7. Section 80E — Education Loan Interest

Interest paid on a loan taken for higher education (for yourself, spouse, children, or a student for whom you are a legal guardian) is fully deductible — with no upper limit — for up to 8 years from the year you start repaying. The deduction is only for interest, not for the principal repayment.

8. Section 80G — Donations to Approved Charities

Donations to approved funds and charitable institutions qualify for deductions of 50% or 100% of the donation amount, subject to a qualifying limit of 10% of your adjusted gross total income. The PM Relief Fund, National Defence Fund, and many registered NGOs qualify for 100% deduction with no limit.

9. Section 80TTA / 80TTB — Savings Interest

• Section 80TTA (below 60 years): Deduction of up to ₹10,000 on interest income from savings bank accounts (not FDs or RDs).
• Section 80TTB (senior citizens 60+): Up to ₹50,000 on interest from savings accounts, FDs, post office deposits, and RDs. This replaces 80TTA for senior citizens.

10. Section 80U / 80DD — Disability

A flat deduction for taxpayers with a disability (80U) or for those maintaining a dependant with a disability (80DD):

• 40%–79% disability: ₹75,000 deduction
• 80% or more (severe disability): ₹1,25,000 deduction

How to maximise your deductions

The maximum combined benefit from old regime deductions for a salaried individual can easily exceed ₹4–5 lakh per year:

• Standard deduction: ₹50,000
• 80C (maxed out): ₹1,50,000
• 80CCD(1B) NPS: ₹50,000
• 80D (self + parents, both senior): up to ₹1,00,000
• Section 24(b) home loan interest: ₹2,00,000
• Total: ₹5,50,000 in deductions

At this level of deductions, the old regime can save significantly more tax than the new regime for most income levels. Use our Income Tax Calculator to enter your actual numbers and compare both regimes instantly.