How to Save Income Tax in India (FY 2025-26)

1. Start with Standard Deduction

Standard deduction is the easiest tax benefit because it requires no separate investment proof. For salaried individuals and pensioners, this amount is deducted automatically from salary income in the old regime.

• Standard deduction (old regime): ₹50,000
• No bills or receipts needed
• Applied before slab calculation

Example: Gross salary ₹10,00,000 becomes ₹9,50,000 before applying other deductions.

2. Max Out Section 80C (Up to ₹1.5 Lakh)

Section 80C is the most popular tax-saving bucket. You can claim up to ₹1,50,000 across eligible instruments.

Tax impact: If you are in 30% slab, full 80C can save roughly ₹46,800 including cess.

3. Claim Health Insurance Under Section 80D

Section 80D rewards you for buying health insurance for family and parents:

• Self + spouse + children: up to ₹25,000
• Parents below 60: additional ₹25,000
• Senior citizen parents: additional ₹50,000
• Preventive health check-up: up to ₹5,000 (within overall limit)

Maximum practical 80D claim for many families can reach ₹75,000 or ₹1,00,000 depending on age profile.

4. Use HRA Exemption Correctly

HRA can significantly reduce taxable income if you live in rented accommodation. Exemption is calculated as the minimum of three values:

1. Actual HRA received
2. 50% of basic salary (metro) or 40% (non-metro)
3. Actual rent paid minus 10% of basic salary

Keep rent receipts and landlord PAN (if annual rent exceeds ₹1 lakh). This deduction is available only in old regime.

5. Add NPS for Extra ₹50,000 (80CCD(1B))

NPS is one of the most efficient tax-saving tools because it gives deduction beyond 80C.

• Up to ₹1.5 lakh under 80C
• Additional ₹50,000 under 80CCD(1B)
• Total potential benefit: ₹2,00,000 (80C + 80CCD(1B))

At 30% slab, extra NPS ₹50,000 can save about ₹15,600 including cess.

6. Claim Home Loan Interest Under Section 24(b)

If you have a self-occupied house, you can claim up to ₹2,00,000 per year on home loan interest under old regime. This is separate from principal deduction under 80C.

• Interest deduction: up to ₹2,00,000 (Sec 24b)
• Principal repayment: up to ₹1,50,000 (Sec 80C)
• Combined home-loan related tax benefit can be substantial

7. Put It Together: Example Tax Saving Plan

For a salaried person with gross salary ₹15,00,000 (old regime):

This can bring taxable income from ₹15,00,000 to around ₹8,55,000 before slab tax calculation.

8. Quick Tax-Saving Checklist Before 31 March

• Review salary structure and choose old vs new regime correctly
• Maximize remaining 80C limit
• Buy or top up health insurance for 80D
• Contribute additional ₹50,000 to NPS (if suitable)
• Collect rent receipts and verify HRA details
• Collect home loan interest certificate from lender
• Submit all proof to employer before payroll deadline
• Re-check final tax with calculator before ITR filing

Frequently Asked Questions

How can I save maximum income tax in India?

Use a combination of Section 80C (up to ₹1.5 lakh), 80D (health insurance), HRA exemption, home loan interest under Section 24(b), and NPS additional ₹50,000 under 80CCD(1B) in the old regime.

Can I claim both 80C and NPS deduction?

Yes. You can claim up to ₹1.5 lakh under 80C and an additional ₹50,000 under 80CCD(1B) for NPS, giving total deduction of ₹2 lakh.

Is home loan interest tax deductible?

Yes, for a self-occupied property under old regime, home loan interest up to ₹2 lakh per year can be claimed under Section 24(b).

Can I claim HRA and home loan together?

In specific situations, yes. If you live in a rented house in one city and own a house in another city for valid reasons, you may claim both subject to tax rules.

Is tax saving possible in new regime?

Most deductions are not available in the new regime. Tax saving mainly comes from lower slab rates and rebate. If you have high deductions, old regime may still be better.

Useful Calculators for Tax Planning

Use these tools to make your tax plan practical and numbers-driven: