Tax-saving deductions only work under the Old Tax Regime — the New Regime doesn't allow most of them. If you're considering the Old Regime, or already use it, here's a complete rundown of the deductions that actually move the needle, and how much each one can realistically save you.
Before you read further: if you're not sure which regime suits you, compare both using our Income Tax Calculator first — these deductions only matter if the Old Regime turns out to be the better choice for your income.
Section 80C — the ₹1,50,000 workhorse
This is the most well-known deduction, letting you reduce taxable income by up to ₹1,50,000 a year across a mix of eligible investments and expenses.
| Instrument | Typical Returns | Lock-in |
|---|---|---|
| EPF (Employee Provident Fund) | ~8.25% | Till retirement |
| PPF (Public Provident Fund) | ~7.1% | 15 years |
| ELSS Mutual Funds | Market-linked | 3 years |
| Life insurance premiums | N/A | Policy term |
| 5-year tax-saving FD | ~6.5-7% | 5 years |
| Home loan principal repayment | N/A | Loan term |
| Children's tuition fees | N/A | N/A |
Note that your EPF contribution (deducted automatically from salary) already counts toward this ₹1.5L limit — many salaried employees fill a large chunk of 80C without doing anything extra.
Section 80D — health insurance premiums
Premiums paid for health insurance are deductible separately from 80C:
- ₹25,000 for self, spouse, and children (below 60)
- ₹50,000 if you or your spouse are a senior citizen
- An additional ₹25,000–50,000 for parents' health insurance, depending on their age
So a taxpayer paying for their own insurance and their senior-citizen parents' insurance could claim up to ₹75,000 total under 80D.
Home loan interest — Section 24(b)
Interest paid on a home loan for a self-occupied property is deductible up to ₹2,00,000 per year, separate from the 80C limit (which covers only the principal portion). This is one of the largest single deductions available if you have an active home loan.
NPS — the extra ₹50,000 (Section 80CCD(1B))
Contributions to the National Pension System get an additional ₹50,000 deduction beyond the 80C limit — meaning a disciplined investor can push total deductions to ₹2,00,000 through 80C + NPS combined.
Other deductions worth knowing
- 80E — interest on education loans, no upper limit, for up to 8 years
- 80TTA / 80TTB — savings account interest up to ₹10,000 (₹50,000 for senior citizens) is deductible
- 80G — donations to eligible charities, 50–100% deductible depending on the organization
Putting it together — a realistic example
A salaried individual maximizing 80C (₹1,50,000), NPS (₹50,000), 80D for self + parents (₹75,000), and claiming ₹2,00,000 in home loan interest could reduce their taxable income by up to ₹4,75,000 — often enough to make the Old Regime meaningfully cheaper than the New Regime, despite its higher slab rates.
See exactly how much these deductions save you on your income.
Compare Old vs New Regime →This article is general educational information, not personalized tax advice. Deduction eligibility and limits can have exceptions based on your specific circumstances — verify with a CA before making investment decisions purely for tax-saving purposes.