New Delhi, July 26: When filing Income Tax Returns (ITR), many individuals accurately report their income and tax information but often overlook crucial tax deductions that could significantly reduce their tax liability. This oversight can lead to taxpayers paying more tax than necessary. If you are filing your ITR for the financial year 2025-26 and have opted for the old tax regime, you can take advantage of several important deductions to achieve substantial tax savings.
It is important to note that most of these deductions are not available under the new tax regime. Therefore, it is advisable to compare both tax regimes before filing your return to determine which option offers you greater savings.
If you have made contributions to the Public Provident Fund (PPF), Employee Provident Fund (EPF), tax-saving fixed deposits, Equity Linked Savings Schemes (ELSS), National Savings Certificates (NSC), Sukanya Samriddhi Yojana, life insurance premiums, children’s tuition fees, or principal repayments on home loans, you can claim a tax deduction of up to ₹1.5 lakh under Section 80C. This is the most commonly utilized provision for tax savings.
Additionally, if you have invested in the National Pension System (NPS), you may be eligible for an additional tax deduction of up to ₹50,000 under Section 80CCD(1B). This deduction is separate from Section 80C, allowing for a total tax saving of up to ₹2 lakh when combined.
If you have taken out a health insurance policy for yourself, your spouse, children, or parents, you can benefit from tax deductions under Section 80D. Depending on family status and senior citizen status, this deduction can range from ₹25,000 to ₹1 lakh, provided the premium is paid through banking channels.
Moreover, education loans taken for higher education can also assist in tax savings. Under Section 80E, the entire interest paid on education loans is eligible for tax deduction for a specified period, with no maximum limit. However, this deduction applies only to interest, not the principal amount.
If you have donated to a government-recognized institution, trust, or relief fund, you may be eligible for a tax deduction of 50% or 100% under Section 80G, depending on the organization. It is essential to keep the donation receipt and the registration details of the respective organization for claiming deductions.
Furthermore, if you have taken a home loan, you can claim a tax deduction of up to ₹2 lakh on the interest paid under Section 24(b). Note that this deduction applies only to interest, while the principal repayment is claimed under Section 80C.
Before filing your return, ensure that you reconcile Form 16, Annual Information Statement (AIS), and Form 26AS to avoid any discrepancies in your income and tax deduction information. Keep all documents and receipts related to the deductions you intend to claim. Also, select the appropriate tax regime based on your income and investments. Ensure that your bank account, PAN, Aadhaar, and other personal information are accurately entered. Most importantly, complete the e-verification after filing your ITR, as failure to do so may render your return process incomplete.
Experts emphasize that filing income tax returns is not just a legal obligation but also a part of effective tax planning. By correctly utilizing available tax deductions and ensuring all necessary documents are in order, taxpayers can not only avoid paying excess tax but also steer clear of any future tax-related issues.
Deependra Singh Chundawat is a Senior Sub-Editor at Udaipur Kiran, specializing in a wide range of technology topics including mobile phones, applications, gaming, PCs, and wearables. Along with covering the latest tech news, he also creates engaging web stories. Passionate about emerging technologies, he stays up to date with the newest trends and enjoys reading and writing about the latest mobile launches and digital innovations.
