Tax deduction

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 Tax deductions are specific expenses or investments subtracted from your gross taxable income, thereby reducing the amount of income subject to taxation. Under the Old Tax Regime in India, these play a vital role in minimizing tax liabilities, whereas the New Tax Regime primarily operates without most traditional deductions. [1, 2, 3]




Key Tax Deductions Under the Old Tax Regime

Under the Indian Income Tax Act, the most popular deductions include:
  • Section 80C: Allows a combined deduction of up to ₹1.5 Lakhs per financial year for investments and expenses like EPF, PPF, ELSS mutual funds, life insurance premiums, and principal home loan repayments.
  • Section 80D: Covers premiums paid for health insurance. You can claim up to ₹25,000 for yourself and your family, and up to ₹50,000 if your parents are senior citizens.
  • Section 24(b): Deductible for interest paid on a home loan, permitting up to ₹2 Lakhs in tax savings for self-occupied properties.
  • Section 80E: Allows deduction for the interest paid on an approved higher education loan.
  • Section 80G: Applicable for donations made to specified charitable funds and organizations. [5]
New Tax Regime

In the current taxation landscape, the New Tax Regime is the default framework for individuals and HUFs. It offers lower tax slabs and standard deductions (such as ₹75,000 for salaried employees) but disallows most Chapter VI-A deductions (including Section 80C and 80D). Taxpayers can evaluate both structures to determine which yields a lower overall tax liability. [1, 6, 7, 8, 9]

You can calculate and compare your tax liabilities using the official Income Tax Department Tax Tools portal. For a full list of eligible claims and conditions, visit the Income Tax Department Deductions page. [10, 11, 12, 13]


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