Income tax deductions are amounts the law lets you subtract from gross income before tax is worked out, such as ₹1.5 lakh under 80C or health insurance under 80D, while exemptions under section 10 keep certain receipts, like PPF interest or gratuity within limits, out of income altogether. Most deductions work only in the old regime; the new regime keeps a short list, led by the ₹75,000 standard deduction for salary.
This hub sets out every common deduction and exemption with its limit for FY 2025-26, shows which survive in the new regime, and links to a detailed guide for each topic. For tax year 2026-27 the same reliefs carry over into the Income-tax Act, 2025 under new section numbers. If you are unsure which regime to pick, start with the regime calculator.
Quick facts
Standard deduction
₹75,000 new regime; ₹50,000 old regime (salary and pension)Largest savings slot
80C: ₹1,50,000Health cover
80D: ₹25,000 self and family; ₹50,000 if senior; more for parentsHome loan interest
₹2 lakh for a self-occupied home (old regime)Still allowed in new regime
Standard deduction, employer NPS 80CCD(2), 80CCH, let-out home loan interest, family pensionExemptions
Section 10 in the 1961 Act; schedules in the 2025 Act80C under the 2025 Act
Section 123
Deductions in income tax, exemptions and the standard deduction
- Exemption: income that is never counted, such as agricultural income, PPF interest or HRA within limits. Mostly in section 10.
- Deduction from a head of income: taken while computing one head, such as the standard deduction from salary, the 30% deduction on rent, or home loan interest under 24(b).
- Chapter VI-A deduction: taken from gross total income, from 80C to 80U, for savings, insurance, loans, donations and disability.
- Rebate: not a deduction at all; section 87A reduces the tax itself.
The order matters. Exemptions come off first, then deductions within each head, then Chapter VI-A deductions, then slab rates, then the rebate. The five heads of income guide explains the first steps.
Income tax deductions chart for FY 2025-26
| Provision | Purpose | Ceiling | Allowed in new regime |
|---|---|---|---|
| 16(ia) | Standard deduction on salary or pension | ₹75,000 (new) or ₹50,000 (old) | Yes |
| 16(iii) | Professional tax paid | Actual, up to ₹2,500 | No |
| 57(iia) | Family pension | One third, up to ₹25,000 (new) or ₹15,000 (old) | Yes |
| 24(b) | Home loan interest | ₹2 lakh self-occupied; full if let out | Let-out only |
| 80C, 80CCC, 80CCD(1) | PPF, EPF, ELSS, insurance, tuition, principal, pension, NPS | ₹1,50,000 together | No |
| 80CCD(1B) | Extra NPS contribution | ₹50,000 | No |
| 80CCD(2) | Employer NPS contribution | 14% of salary (new); 10% (old, private employers) | Yes |
| 80CCH | Agnipath corpus fund | Full contribution | Yes |
| 80D | Health insurance and check-up | ₹25,000 or ₹50,000 (senior), plus the same for parents | No |
| 80DD | Care of a disabled dependant | ₹75,000; ₹1,25,000 for severe disability | No |
| 80DDB | Treatment of specified diseases | ₹40,000; ₹1,00,000 for seniors | No |
| 80E | Education loan interest | No cap, 8 years | No |
| 80EE, 80EEA | Extra home loan interest on older loans | ₹50,000 or ₹1,50,000 | No |
| 80EEB | Electric vehicle loan interest (loans of FY 2019-20 to FY 2022-23) | ₹1,50,000 | No |
| 80G | Donations to approved funds and charities | 50% or 100%, some with a cap | No |
| 80GG | Rent without HRA | ₹60,000 a year | No |
| 80TTA, 80TTB | Bank interest | ₹10,000; ₹50,000 for seniors | No |
| 80U | Taxpayer with a disability | ₹75,000; ₹1,25,000 for severe disability | No |
| 80JJAA | New employees hired by a business | 30% of additional cost for three years | Yes |
Senior here means a resident aged 60 or more. Limits apply per taxpayer, so a husband and wife who each pay their own premiums each get their own 80D limit.
What is standard deduction in income tax
The standard deduction is a flat amount taken off salary or pension without any bills. For FY 2025-26 it is ₹75,000 if you choose the new regime, against ₹50,000 if you stay with the old one. With the new regime rebate, it means salary up to ₹12.75 lakh pays no tax. Pensioners get it too, and a family pension gets a separate deduction under section 57(iia).
If you have two employers in the same year, the deduction is still one amount in total, not one per employer. Check that your two Form 16s do not both apply it in full when you file.
Section 10 of income tax act: exemption list
| Clause | What is exempt |
|---|---|
| 10(1) | Agricultural income (counted only to set the rate on other income) |
| 10(2A) | A partner's share of profit from a firm |
| 10(4)(ii) | Interest on an NRE account |
| 10(5) | Leave travel concession fare (old regime) |
| 10(7) | Allowances paid abroad by the government to its Indian citizen employees |
| 10(10) | Gratuity, up to ₹20 lakh for non-government employees |
| 10(10AA) | Leave encashment on retirement, up to ₹25 lakh for non-government employees |
| 10(10CC) | Tax on non-monetary perquisites paid by the employer |
| 10(10D) | Life insurance maturity, subject to premium conditions |
| 10(11) | PPF interest and withdrawals |
| 10(12) | EPF balance on withdrawal after five years of service, within limits |
| 10(13A) | HRA, within limits (old regime) |
| 10(14) | Official-duty and personal allowances |
| 10(16) | Scholarships for education |
| 10(23C) | Income of approved funds, universities, hospitals and institutions |
| 10(26) | Income of members of Scheduled Tribes living in specified areas |
| 10(26AAA) | Income of eligible Sikkimese individuals |
| 10(37) | Compensation for compulsory acquisition of urban agricultural land |
Interest on employee EPF contributions above ₹2.5 lakh a year (₹5 lakh where the employer does not contribute) is taxable. Under the 2025 Act, these exemptions move out of section 10 into schedules at the end of the Act. Allowances are explained in the salary and perquisites guide; see also agricultural income and tax on gifts.
Worked example: do deductions beat the new regime?
Facts, FY 2025-26. Neha earns a salary of ₹18,00,000. In the old regime she can claim HRA exemption of ₹2,40,000, 80C of ₹1,50,000, 80D of ₹25,000, NPS under 80CCD(1B) of ₹50,000 and home loan interest of ₹2,00,000.
Old regime. ₹18,00,000 minus HRA ₹2,40,000 and standard deduction ₹50,000 gives ₹15,10,000. Minus ₹4,25,000 of other claims gives ₹10,85,000. Tax: ₹12,500 + ₹1,00,000 + ₹25,500 = ₹1,38,000. With 4% cess: ₹1,43,520.
New regime. ₹18,00,000 minus ₹75,000 gives ₹17,25,000. Tax: ₹20,000 + ₹40,000 + ₹60,000 + ₹25,000 = ₹1,45,000. With cess: ₹1,50,800.
Result. The old regime saves ₹7,280 here, but only because she uses HRA and a home loan. Without the ₹2 lakh interest, the new regime would win.
Tax saving options for salaried people
How to save income tax depends first on the regime. In the new regime the main levers are the employer's NPS contribution under 80CCD(2), the standard deduction, and choosing tax-efficient pay items such as official-duty allowances. In the old regime the order most people work through is:
- EPF, which often fills much of the 80C limit on its own.
- Health insurance for self and parents under 80D.
- Rent through HRA, or 80GG if there is no HRA.
- Home loan interest and principal.
- The extra ₹50,000 NPS slot.
- Donations under 80G.
Among tax saving investments, the options differ in lock-in and risk: PPF and Sukanya Samriddhi are long and fixed, tax saver deposits run five years, and ELSS funds three years with market risk. This site does not rank products; the best tax saving investment is one you would hold even without the tax benefit.
Guides in this section
| Page | What it answers |
|---|---|
| Section 80C | The ₹1.5 lakh deduction, eligible items, ELSS and NPS |
| Section 80D | Health insurance and check-up limits for self and parents |
| Section 80G | Donations that qualify and at what percentage |
| Section 80GG | Rent deduction when salary has no HRA |
| 80E, 80EE and 80EEA | Education loan and older home loan interest deductions |
| Home loan interest (24b) | Interest limits and tax on rental income |
| Salary and perquisites (17) | What counts as salary, allowances and perks |
| Five heads of income | How all income is grouped before tax |
| Agricultural income | When farm income is exempt and how it affects the rate |
| Tax on gifts | Which gifts are taxed and the ₹50,000 rule |
| Residential status, NRI tax | Resident, RNOR or NRI, and what each pays tax on |
| 44AD presumptive tax | Flat profit rates for small businesses |
| 44ADA for professionals | 50% presumptive profit for professionals |
| Tax audit (44AB) | Who needs an audit and the due dates |
| Section 43B | Expenses allowed only when actually paid |
| Cash limits (269ST, 269SS) | Cash receipt, loan and expense limits |
| PAN card and Aadhaar link | Linking PAN with Aadhaar and the effect of not linking |
Deductions after the Income-tax Act, 2025
| Item | FY 2025-26 | Tax year 2026-27 |
|---|---|---|
| Chapter | Chapter VI-A (80C to 80U) | Deductions chapter of the 2025 Act |
| 80C | Section 80C | Section 123, items in Schedule XV |
| Exemptions | Section 10 | Schedules to the 2025 Act |
| Default regime | New regime | New regime |
| Employee declaration | Form 12BB | Form 124 |
Limits were carried over, but the Income-tax Rules, 2026 raised some allowance limits from tax year 2026-27, such as children's education and hostel allowances. Read the 2025 Act overview for the wider change.
Mistakes when claiming deductions
| Error | Fix |
|---|---|
| Claiming old regime deductions after choosing the new regime | Pick the regime first, then claim only what it allows |
| Paying health insurance premium in cash | Pay by any non-cash mode; cash premium gets no 80D |
| Claiming deductions without proof | Keep receipts and certificates; the department may ask |
| Missing a deduction the employer did not apply | Claim it in the return; excess TDS is refunded after processing |
This list is general information on deductions and exemptions, not a plan for your taxes. Limits change with Finance Acts and Rules, so verify each figure for your year using the e-filing portal, and take a chartered accountant's view for your own case.
Sources we checked
- Income-tax Act, 1961, section 10 and Chapter VI-A
- Income-tax Act, 1961, sections 16 and 24
- Income-tax Act, 2025, section 123
- Income-tax Rules, 2026
Frequently asked questions
What are the main income tax deductions in the old regime?
The largest are 80C (₹1.5 lakh), 80D for health cover, 24(b) home loan interest (₹2 lakh), the extra ₹50,000 for NPS, HRA exemption and the ₹50,000 standard deduction.
Which deductions are allowed in the new tax regime?
The ₹75,000 standard deduction, employer NPS under 80CCD(2), the Agnipath fund under 80CCH, family pension deduction, interest on a let-out house and 80JJAA for businesses.
What does section 10(10D) of income tax act exempt?
Money received from a life insurance policy, including bonus, subject to conditions on the premium compared with the sum assured and, for newer policies, on the total yearly premium.
Why is PPF tax free under section 10(11) of income tax act?
That clause exempts payments from the Public Provident Fund, so PPF interest and maturity are tax free.
Is the standard deduction available to pensioners?
Yes. Pension from a former employer is salary, so pensioners get ₹75,000 under the new regime or ₹50,000 under the old one.
Who benefits from section 10(26) of income tax act?
The clause exempts income of members of Scheduled Tribes living in specified areas, such as certain north-eastern states, from sources in those areas.