Income Tax Deductions Under Section 80C to 80U for FY 2025-26 (AY 2026-27)

In India, the tax system is governed by the Income Tax Act, 1961, which outlines the rules, rates, and exemptions applicable to different income categories. Individuals, Hindu Undivided Families (HUFs), companies, and firms are eligible taxpayers. The taxable income is categorised under various sections such as salary, business income, property income, and capital gains. Certain exemptions, deductions, and rebates are available to reduce the tax obligations for the taxpayers. Different tax slabs apply to different income levels, with tax rates ranging from 5% to 30%. 

10 Effective Income Tax Deductions to Reduce Taxes in FY 2025-2026

The Income Tax Act, 1961 provides several tax deductions under different sections that can help you reduce your taxable income and save funds. Here are ten useful income tax deductions from Section 80C to 80U for the FY 2025-2026

Section 80C:

Section 80C allows you to deduct up to Rs.1.5 Lakh from your income for investments in specified instruments such as the Public Provident Fund (PPF), the Employees Provident Fund (EPF), and the National Savings Certificate (NSC), among others. 

Section 80CCD:

This Section allows you to claim deductions of up to Rs.1.5 Lakh for National Pension System contributions (NPS). 

Section 80D:  

Under Section 80D, a non-senior citizen can claim tax deductions of up to Rs.25,000 annually on medical insurance premiums paid for themselves, their spouse, dependent children, and their parents. For senior citizens, the maximum deduction is Rs.50,000 for premiums covering self, spouse, and children.

Section 80E:  

This Section allows you to deduct the interest paid on student loans for higher education. There is no maximum capping on the number of deductions you can claim. 

Section 80G:  

Under Section 80G, you can deduct charitable contributions made to specific organisations. Depending on the type of institution, the maximum deduction under this section ranges between 50% and 100% of the donated amount. 

Section 80TTA:  

Under this Section, you can deduct up to Rs.10,000 for interest earned on savings accounts. 

Section 80GG:  

If you do not receive HRA as part of your salary, you can claim deductions for the rent paid. Section 80GG allows for a maximum deduction of Rs.60,000. 

Section 80RRB:  

Section 80RRB allows you to deduct up to a maximum of Rs.3 Lakh on royalties received from patents.

Section 80U:  

This Section allows you to deduct expenses for taxpayers with disabilities. The maximum deduction under this section is Rs.75,000 for persons with disability and Rs.1.25 Lakh for persons with severe disability. 

Section 24(b):  

Section 24(b) provides substantial income tax benefits on Home Loans. If you have a Home Loan on a self-occupied property, you can deduct a maximum of Rs.2 Lakh on the interest paid towards the loan. 

How to Calculate Income Tax?

Income tax is calculated in accordance with the Income Tax Act, 1961 and the rules and regulations determined by the Central Board of Direct Taxes. Here is an overview of how income tax is calculated in India: 

1. Determine Your Taxable Income

All sources of income, such as salary, business or professional income, capital gains, and other sources, are included in your taxable income. Income Tax Deductions under Sections 80C, 80D, and other Sections of the Income Tax Act, 1961 can help you reduce your taxable income. 

Also Read: How Much Tax Can be Saved Under Sections 80C, 80D, and 80G? 

2. Determine Your Tax Slab

The Indian tax system is divided into several tax slabs and tax rates, which vary according to your taxable income. Under the old tax regime, the income tax slab and rate for individuals below the age of 60 years is given below: 

3. Calculate Your Tax Liability

To calculate your tax liability, you can use an online income tax calculator and provide the required details, such as the assessment year, taxpayer category, residential status, total income and deductions, and age. You can use an Income Tax Calculator online to calculate the tax saved through a Home Loan. 

4. File Your Tax Return

Finally, by the due date, you must file your income tax return. 

Steps to Filing Your Income Tax in India:

Step 1: Gather all of your income-related documents, such as salary slips, Form 16 (applicable for employees), and bank statements. 

Step 2: Calculate your taxable income received from all sources, such as salary, business or professional earnings, capital gains, and other income. You can reduce this taxable income by claiming deductions under various Sections.

Step 3: Calculate your tax liability as per the tax slabs and rates using an online income tax calculator. 

Step 4: Log in to the e-Filing portal of the Income Tax Department. To complete the registration process, you will need to provide your PAN (Permanent Account Number) and other personal information. 

Step 5: Complete the ITR form by providing details such as the taxable income, deductions, and tax liability. 

Step 6: Preview your tax return to ensure that all of the information is correct and proceed to file the tax return. 

It is advisable to keep a copy of your tax return and all supporting documents. To avoid penalties and interest charges, you must pay taxes before the due date. 

Also Read: How to File your ITR for Home Loan

How to Use an Income Tax Calculator?

An income tax calculator can assist you in determining your tax liability. Here is how to use an income tax calculator: 

Step 1: Visit the official Income Tax Department website and navigate to the income tax calculator.

Step 2: Select the appropriate assessment year for which you want to calculate your income tax.

Step 3: Choose between the old or the new tax regime. 

Step 4: Provide details of your income from various sources.

Step 5: Input any deductions available to you under various Sections. 

Step 6: Provide any additional information required, such as interest on Home Loans, HRA exemption, or any tax-saving investments.

Step 7: Click on 'Calculate' to view the estimated tax liability based on the income and deductions entered.