Most salaried Indians overpay tax every year — simply because they don't know all the legal deductions available to them.
Here are 15 completely legal ways to reduce your income tax in 2026. Most of these deductions are only available under the
Old Tax Regime. Use our
Income Tax Calculator to compare both regimes.
1. Section 80C — Save up to ₹1.5 Lakh
The most popular deduction. Invest in any of these to claim up to ₹1.5 lakh deduction:
- EPF — your employee PF contribution is automatically counted
- PPF — ₹500 to ₹1.5 lakh per year, 15-year lock-in
- ELSS mutual funds — only 3-year lock-in, best returns among 80C options
- Life insurance premium — for yourself, spouse or children
- Home loan principal repayment
- Children's tuition fees — up to 2 children
Tax saved at 30% slab: Up to ₹46,800 per year!
2. Section 80CCD(1B) — NPS Extra ₹50,000
This is the most underused deduction in India. Invest ₹50,000 in NPS and get an
additional deduction over and above your ₹1.5 lakh 80C limit.
- Total deduction possible: ₹2 lakh (80C + 80CCD 1B)
- Tax saved at 30% slab: ₹62,400 per year
Use our
NPS Calculator to plan.
3. Section 80D — Health Insurance Premium
Claim deduction on health insurance premiums:
- Self and family (below 60): up to ₹25,000
- Senior citizen parents: up to ₹50,000
- Maximum total: ₹75,000 per year
4. HRA Exemption
If you live in a rented house and receive HRA, you can claim HRA exemption. The exempt amount is the
lowest of:
- Actual HRA received
- 50% of basic salary (metro) or 40% (non-metro)
- Actual rent paid minus 10% of basic salary
5. Section 24(b) — Home Loan Interest
If you have a home loan on a self-occupied property, you can deduct up to
₹2 lakh of interest paid per year. Use our
EMI Calculator to see your home loan interest.
6. Standard Deduction — ₹50,000 Automatic
Every salaried employee gets ₹50,000 standard deduction automatically — no investment needed, no proof required. Available in both Old and New regime.
Tax saved at 30% slab: ₹15,600 automatically.
7. Section 80E — Education Loan Interest
Paying interest on an education loan? The entire interest amount is deductible — no upper limit. Available for 8 years from the year repayment starts.
8. Section 80G — Donations
Donations to approved charities and funds are deductible. PM Relief Fund, PM CARES: 100% deduction. Approved NGOs: 50% deduction.
9. Section 80TTA — Savings Account Interest
Interest earned on savings bank accounts is exempt up to ₹10,000 per year (₹50,000 for senior citizens under 80TTB). Applies automatically — no investment needed.
10. Leave Travel Allowance (LTA)
If your salary structure includes LTA, claim exemption on actual travel costs (train/air) for travel within India — twice in a block of 4 years.
11. Section 80GG — Rent Without HRA
Don't receive HRA but pay rent? Claim deduction under 80GG — up to ₹60,000 per year (₹5,000/month), subject to conditions.
12. Food Coupons / Meal Allowance
Sodexo or Zomato vouchers provided by employer — up to ₹26,400 per year is tax-free. Ask HR to restructure your CTC to include meal allowance.
13. Professional Tax
Professional tax paid to the state government is deductible. Maximum ₹2,500/year. Happens automatically through your employer.
14. Capital Loss Set-Off
Stock/mutual fund losses can be set off against capital gains to reduce tax. Short-term losses offset STCG and LTCG. Unused losses can be carried forward for 8 years.
15. Maximum Tax You Can Save — Summary
| Deduction |
Maximum Amount |
| 80C |
₹1,50,000 |
| 80CCD(1B) NPS |
₹50,000 |
| 80D Health Insurance |
₹75,000 |
| 24(b) Home Loan Interest |
₹2,00,000 |
| Standard Deduction |
₹50,000 |
| Total Possible |
₹5,25,000+ |
At 30% tax slab, saving ₹5.25 lakh in deductions =
₹1,63,800 in tax saved per year!
Disclaimer: Tax laws change frequently. This article is based on current tax rules as of FY 2025-26. Consult a CA for personalised tax advice. The Invest Mate is not SEBI registered. 
