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Tax Deductions (Section 80C, 80D, etc.)
Tax Deductions (Section 80C, 80D, etc.)
Tax deductions reduce your taxable income, thereby lowering your overall tax liability. They are available mainly under the old tax regime. Key deductions include:
Section 80C: Up to ₹1,50,000 for investments like Employee Provident Fund (EPF), Public Provident Fund (PPF), National Savings Certificate (NSC), life insurance premiums, Equity-Linked Savings Schemes (ELSS), principal repayment of home loan, tuition fees for children, Sukanya Samriddhi Yojana, and 5-year tax-saving fixed deposits.
Section 80D: Up to ₹25,000 for medical insurance premiums for self, spouse, and dependent children; up to ₹50,000 for senior citizens. An additional ₹5,000 is allowed for preventive health check-ups.
Section 80E: Interest paid on education loans, with no upper limit, for up to 8 years.
Section 80TTA/80TTB: Deduction on interest from savings accounts (up to ₹10,000 for non-senior citizens, up to ₹50,000 for senior citizens)1.
Section 80G: Donations to specified charities and relief funds, with varying limits.
Section 80GG: Deduction for rent paid if HRA is not received, subject to limits.
Other Sections (80CCC, 80CCD, 80DD, 80DDB, 80EE, 80EEA, 80EEB, etc.): Cover pension funds, NPS contributions, medical expenses for specified diseases, interest on home/electric vehicle loans, and more.
Tax Exemptions (HRA, LTA, etc.)
Tax Exemptions (HRA, LTA, etc.)
Tax exemptions are specific incomes or allowances that are not included in your total taxable income:
House Rent Allowance (HRA): Exempt under Section 10(13A) if you live in rented accommodation and receive HRA as part of your salary. The exemption is the least of actual HRA received, 50% of basic salary (metro cities)/40% (other cities), or rent paid minus 10% of salary. Not available under the new regime.
Leave Travel Allowance (LTA): Exempt under Section 10(5) for travel expenses within India, claimable for two journeys in a block of four years. Only travel costs (not accommodation/food) are covered. Not available under the new regime.
Other Exemptions: Gratuity, leave encashment, commuted pension, agricultural income, certain allowances, scholarships, and more under various clauses of Section 10.
Rebate Under Section 87A
Rebate Under Section 87A
Section 87A provides a direct rebate (tax credit) for resident individuals with income below a certain threshold:
FY 2025-26 (AY 2026-27):
Old Regime: Rebate up to ₹12,500 for taxable income up to ₹5 lakh, making tax liability zero for such individuals.
New Regime: Rebate up to ₹60,000 for taxable income up to ₹12 lakh (excluding special rate incomes like certain capital gains), making tax liability zero for such individuals.
Eligibility: Only for resident individuals (including senior citizens up to 80 years). Not available for super senior citizens (80+ years).
How it works: The rebate is applied to the total tax before health and education cess is added. If your calculated tax is less than the rebate amount, your tax liability becomes zero.
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