10 legal deductions that can save you ₹2 lakh+ in tax. With real examples and calculator links.
Section 80C is the most popular tax-saving section. Invest up to ₹1.5 lakh in eligible instruments and deduct the full amount from taxable income. Options: PPF (7.1% guaranteed, 15-year lock-in), ELSS mutual funds (market-linked, 3-year lock-in, highest returns historically), Employee PF (already deducted from salary), LIC premium, NSC, 5-year tax-saver FD.
Best choice: ELSS for returns + tax saving (10-15% historical returns). PPF for safety. Most people already have PF deduction eating into this ₹1.5L limit — check how much PF you already invest before adding more.
Example: 30% tax slab, ₹1.5L invested in ELSS → Tax saved = ₹1,50,000 × 30% = ₹45,000 + 4% cess = ₹46,800 saved. Use our tax saving calculator →
This is separate from and additional to the 80C limit. Invest ₹50,000 in NPS (National Pension System) and get an extra deduction of ₹50,000. In 30% tax bracket, this saves ₹15,600 per year — that's ₹1,300/month saved just by opening an NPS account. NPS also gives 10-12% historical returns and provides pension after retirement.
Important: NPS has lock-in till age 60 (partial withdrawal allowed after 3 years for specific purposes). But ₹15,600 tax savings per year compounded over 30 years is worth the lock-in. Use our NPS calculator →
Premium paid for health insurance is deductible under Section 80D. Self + family: up to ₹25,000. Parents below 60: additional ₹25,000. Senior citizen parents (60+): additional ₹50,000. Maximum total: ₹75,000 (₹25K self + ₹50K senior parents). In 30% bracket, ₹75,000 deduction = ₹23,400 tax saved.
Even if you have employer health insurance, you can buy a personal top-up policy for ₹5,000-8,000/year and claim 80D deduction. Add parents to your policy or buy separate — this is often the easiest ₹15,000+ tax saving most people miss.
If your employer pays House Rent Allowance (HRA) and you pay rent, a portion of HRA is exempt from tax. The exempt amount is the least of: actual HRA received, 50% of basic salary (metros) or 40% (non-metros), actual rent paid minus 10% of basic salary. Use our HRA calculator for exact numbers.
Secret strategy: You can pay rent to parents if they own the house — completely legal. Get proper rent receipts, pay via bank transfer, and your parents declare it as rental income (they may owe zero tax if income is low). This saves significant tax for many families.
Interest paid on home loan for self-occupied property is deductible up to ₹2 lakh per year under Section 24b. In 30% slab, ₹2L deduction = ₹62,400 tax saved. For let-out property, there's no upper limit on interest deduction. Additionally, home loan principal repayment qualifies for 80C deduction (within ₹1.5L limit).
Home loan is one of the most powerful tax-saving tools in India when combined — interest (Section 24b) + principal (80C) effectively makes your home loan partially government-funded through tax savings. Calculate with our EMI calculator →
All salaried employees and pensioners get a flat ₹50,000 standard deduction — automatically applied without any investment or proof. This deduction is available in BOTH old and new regime (₹75,000 in new regime from FY 2025-26). No action needed — your employer applies this when computing TDS.
Interest paid on education loan for higher education (self, spouse, children) is fully deductible with NO upper limit. Deduction available for 8 years from start of repayment. For a ₹20L education loan at 10%, interest in Year 1 is approximately ₹1.8L — that's a substantial deduction with zero cap.
If your employer provides LTA component, actual travel expenses within India (economy class air/train/bus) are exempt twice in a 4-year block. Current block: 2022-2025. Submit actual travel bills. Works only under old regime. Useful for salaried employees who travel during holidays.
Donations to approved charities, political parties (under 80GGC), and national funds (PM Cares, etc.) are deductible at 50-100% of donation amount. Popular choices: PM National Relief Fund (100% deduction), CRY (50%), Helpage India (50%). Get a receipt with 80G registration number for claiming.
Interest earned on savings bank account is exempt up to ₹10,000 per year under Section 80TTA. Senior citizens get ₹50,000 exemption under 80TTB (covering both savings and FD interest). Simple deduction — just report your savings account interest in ITR and claim this deduction.