Top 10 Income Tax Deductions for Salaried Employees in India (AY 2026-27)

Maximizing Your Take-Home Salary through Strategic Deductions

Navigating Indian income tax provisions can feel overwhelming, but understanding legal tax deductions empowers salaried professionals to keep more of their hard-earned income. Under the Income Tax Act 1961, tax deductions allow you to subtract eligible expenses and investments from your gross total salary, lowering your final net taxable income. While major Chapter VI-A deductions apply under the Old Tax Regime, essential provisions like the Standard Deduction (Section 16) and Employer NPS Contribution (Section 80CCD(2)) deliver valuable tax relief under the New Tax Regime as well.

Top 10 Income Tax Deductions for Salaried Professionals

Below is an exhaustive guide to the top 10 tax deduction sections available for Assessment Year 2026-27:

• •1. Standard Deduction (Section 16): Flat ₹75,000 deduction under the New Regime and ₹50,000 under the Old Regime without submitting any bill proofs.
• •2. Section 80C (Capped at ₹1,50,000): Investments in Employee Provident Fund (EPF), Public Provident Fund (PPF), ELSS tax-saver mutual funds, National Savings Certificate (NSC), LIC premiums, and principal repayment on home loans.
• •3. Section 80D Medical Insurance (Up to ₹75,000): Deductions for health insurance premiums paid for self, spouse, children (₹25,000 limit), and an additional ₹50,000 for senior citizen parents (above 60 years). Includes ₹5,000 preventive health checkup benefit.
• •4. Section 80CCD(1B) NPS Contribution (Additional ₹50,000): Tier-1 National Pension System investment deduction over and above the ₹1.5 Lakh 80C ceiling.
• •5. Section 10(13A) House Rent Allowance (HRA): Exemption on house rent paid by salaried employees residing in rented premises.
• •6. Section 24(b) Home Loan Interest (Up to ₹2,00,000): Deduct interest paid on home loans for self-occupied residential properties.
• •7. Section 80TTA / 80TTB Savings Interest: Tax relief up to ₹10,000 for regular individuals and ₹50,000 for senior citizens on bank savings account interest.
• •8. Section 80E Education Loan Interest: Full 100% deduction on interest paid on education loans taken for higher studies (self, spouse, or children) with no monetary cap for up to 8 consecutive years.
• •9. Section 80G Charitable Donations: 50% to 100% deduction for contributions made to PM National Relief Fund, approved scientific institutions, and registered NGOs.
• •10. Section 80GG Rent Paid (Without HRA): Up to ₹60,000 annual deduction for self-employed or salaried individuals who do not receive HRA from employers.

HRA Exemption Formula & Computation Breakdown

If you receive HRA as part of your salary structure and live in a rented accommodation, your tax exemption under Section 10(13A) is computed as the MINIMUM of the following three criteria:

How to Claim Deductions Effortlessly in ITRAgent

Filing accurate deductions requires verifying receipts against Annual Information Statement (AIS) records on the Income Tax portal. ITRAgent cross-references your uploaded Form 16, AIS data, and investment proofs to ensure every eligible section is claimed without triggering verification flags or notice risks.