Tax Saving Investments and Deductions for FY 2026-27#
Overview of Tax Deductions#
The Income Tax Act provides multiple deductions to reduce your tax burden. Here's a complete guide.
Section 123 - Rs 1,50,000#
Best Options:#
| Investment | Returns | Lock-in | Risk |
|---|---|---|---|
| PPF | 7.1% | 15 years | Low |
| ELSS | 12-15% | 3 years | Medium |
| NPS | 8-10% | Till 60 | Medium |
| FD (5yr) | 6-7% | 5 years | Low |
| NSC | 6.8% | 5 years | Low |
Section 126 - Rs 1,00,000#
- Health insurance premium
- Preventive health check-up
- Medical expenses for senior citizens
Section 80E - Interest on Education Loan#
- Interest on education loan
- No upper limit
- Available for 8 years
Section 80TTA - Interest on Savings#
- Interest on savings account
- Maximum Rs 10,000
- Not available for senior citizens (use 80TTB)
Section 80G - Donations#
- Donations to registered charities
- 50% or 100% deduction
- Subject to limits
Tax-Saving Strategy#
For Salaried Employee, Old Regime (Rs 15 lakh income):#
These deductions apply only if you opt for the Old Regime — Section 123, 126, and HRA aren't available under the New Regime, which instead gives a flat ₹75,000 standard deduction with no investment required.
- Section 123: Rs 1,50,000
- Section 126: Rs 25,000
- Section 80E: Rs 50,000 (if applicable)
- Standard Deduction (Old Regime): Rs 50,000
- HRA: Rs 1,00,000 (if applicable)
Total potential deductions: Rs 3,75,000+ — compare your actual old-regime deduction total against the New Regime's ₹75,000 standard deduction plus its wider slabs before choosing; at many income levels the New Regime now wins even with several old-regime deductions in play.
Key Tips#
- Start early in the financial year
- Don't invest just for tax - consider returns
- Mix of debt and equity for balance
- Consider old vs new regime before investing