Beyond 80C: tax deductions salaried people miss

80C fills itself

Section 80C, now section 123 under the Income-tax Act 2025, is the deduction everyone knows: ₹1.5 lakh a year, shared by EPF, PPF, ELSS, life insurance premiums, home-loan principal, children's tuition fees and a few others. For a salaried person with a home loan, EPF and loan principal alone often use up most of it, before any deliberate tax-saving investment. The Section 80C calculator shows how much room is actually left.

Once the basket is full, extra 80C investments save nothing. The deductions below sit outside it. Nearly all of them apply only under the old regime, so they matter mainly if you are near the break-even worked out in our post on the old vs new tax regime. The amounts are those that apply for FY 2026-27. The Income-tax Act 2025 renumbered the sections but kept the amounts, and the old numbers are used here because Form 16s and CAs still use them.

The deductions, at a glance

The one that works on both regimes

Employer NPS, section 80CCD(2). If your employer puts part of your CTC into your NPS account, that amount is deductible up to 14% of basic plus dearness allowance on the new regime and 10% on the old. It is the only significant salary deduction that survives into the new regime. On a basic of ₹1 lakh a month, 14% is ₹1.68 lakh a year taken out of taxable income. It usually has to be set up through a CTC restructuring, which means asking HR. NPS tax benefits covers the details, including the ₹7.5 lakh annual limit on combined employer contributions to NPS, EPF and superannuation, beyond which the excess is taxed as a perquisite.

The old-regime ones people overlook

NPS ₹50,000 on top of 80C. Your own NPS Tier-I contribution of up to ₹50,000 gets its own deduction, separate from the 80C basket. Planners that merge the two make a full basket look as if it still has room. In the 30% bracket, ₹50,000 saves ₹15,600 including cess, in exchange for money locked until 60.

Health insurance for parents. Section 80D has two separate buckets, and the parents' bucket has no dependency test: you can claim premiums you pay for parents who live on their own. If either parent is 60 or over, the limit is ₹50,000. A ₹5,000 preventive health check-up can be claimed within these limits, and is the only part that can be paid in cash. Every premium must be paid by a traceable mode. See Section 80D explained.

Education-loan interest, 80E. Interest on a loan for higher education for yourself, your spouse or your children is deductible with no rupee ceiling, for eight years from the year repayment begins. A tenure longer than eight years produces interest you cannot deduct. Education loans and Section 80E works through the numbers.

Rent without HRA, 80GG. People whose salary has no HRA component, or who are self-employed, can claim up to ₹60,000 a year for rent. Neither you, your spouse nor a minor child may own a house in the city where you live, and you file a declaration in Form 10BA. If your salary does include HRA, the HRA calculator applies instead.

Interest deductions. 80TTA exempts up to ₹10,000 of savings-account interest for those under 60. It does not cover fixed deposits. People aged 60 and over get 80TTB instead: up to ₹50,000 of interest from savings accounts and deposits, including FDs. If you file your parents' returns, this one is easy to miss.

Medical and disability. 80DDB covers treatment of specified diseases such as cancer and certain neurological conditions, up to ₹40,000, or ₹1 lakh for a senior, with a prescription from a specialist. 80DD (a disabled dependant) and 80U (yourself) are flat deductions of ₹75,000, rising to ₹1.25 lakh for severe disability, and need a medical authority's certificate rather than receipts.

Donations, 80G. Gifts to approved charities and government relief funds qualify at 50% or 100% depending on the recipient. Cash donations above ₹2,000 do not qualify, and the deduction is claimed against the donee's certificate, which the charity reports to the tax department.

What all this is worth

A deduction saves tax at your marginal rate, not at an average. In the old regime's 30% bracket, ₹1 lakh of deductions saves ₹31,200 with cess. In the 20% bracket it saves ₹20,800. Below ₹5 lakh of taxable income, the old regime's rebate already takes the tax to nil, and more deductions save nothing.

If you do claim these, ELSS is worth a fresh look, because on the old regime its ₹1.5 lakh still counts. As of 1 October 2026 the median ELSS fund (Direct plan, Growth option) returned 10.89% a year over five years across 41 funds, against 10.11% for the median flexi-cap fund across 27. Five-year figures for both categories carry wide spreads, and the ELSS category page shows them fund by fund. Short-term figures are less flattering: the median ELSS fund was down 2.09% over the year to the same date.

A checklist before you file

1. Decide the regime first. On the new regime, everything above except employer NPS is worth nothing.
2. Check how much of 80C is already used by EPF and loan principal.
3. Ask HR whether employer NPS can be added to your CTC.
4. Collect the paperwork that proves the smaller claims: 80D receipts, 80E interest certificates, Form 10BA, 80G certificates.

This is educational commentary, not tax or investment advice; limits change with each Budget, and past fund returns do not predict future returns.