- Salaried taxpayers can reduce tax liability by claiming eligible deductions and choosing the right regime
- Section 80C allows deductions up to Rs 1.5 lakh for investments like PPF and ELSS
- Health insurance premiums qualify for deductions up to Rs 50,000 under Section 80D
As the income tax return filing season for FY26 gets underway, salaried taxpayers can reduce their tax liability by claiming eligible deductions, making tax-saving investments and selecting the tax regime that best matches their income and financial plans.
Most tax-saving opportunities remain available under the old tax regime, while the new regime offers a smaller set of deductions. Taxpayers should review salary components, housing-related benefits and retirement contributions before filing returns to ensure they claim all eligible tax benefits.
Investment And Retirement Benefits
Under Section 80C, taxpayers can claim deductions of up to Rs 1.5 lakh in a financial year for investments in instruments such as Equity Linked Savings Schemes, Public Provident Fund and tax-saving fixed deposits.
National Pension System subscribers can claim deductions on their contributions under Section 80CCD. An additional deduction of up to Rs 50,000 is available under Section 80CCD(1B). Employer contributions to the NPS also qualify for tax benefits.
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Health Insurance Relief
Section 80D allows taxpayers to claim deductions on health insurance premiums. Individuals below the age of 60 can claim up to Rs 25,000, while senior citizens can claim up to Rs 50,000.
The deduction covers premiums paid for self, spouse, children and parents, helping reduce taxable income.
Home Loan Tax Benefits
Home loan borrowers can claim deductions on interest payments under Section 24(b). Owners of self-occupied properties can claim up to Rs 2 lakh on interest paid during a financial year.
First-time homebuyers may also qualify for an additional deduction of up to Rs 1.5 lakh under Section 80EEA on home loan interest. Repayment of the principal amount qualifies for deduction under Section 80C.
Donations And Salary-Linked Exemptions
Donations made to eligible charitable institutions and funds qualify for deductions under Section 80G.
Taxpayers opting for the old regime can also claim the standard deduction of Rs 50,000.
Employees living in rented accommodation may be eligible for House Rent Allowance exemption, depending on their salary structure. The exemption is calculated as the lowest of the following: actual HRA received from the employer, 50% of basic salary in metro cities or 40% in non-metro cities, and rent paid minus 10% of basic salary.
New Tax Regime Offers Fewer Deductions
Most of these deductions are available only under the old tax regime.
Under the new tax regime, taxpayers can claim limited benefits, including deductions for employer contributions to the NPS, interest on home loans for let-out properties under Section 24(b), and a standard deduction of Rs 75,000.
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