Deductions

Deductions, in the context of Indian income tax, refer to the specific amounts that taxpayers are permitted to subtract from their gross taxable income — reducing the base on which income tax is calculated and thereby lowering the overall tax liability. Indian income tax deductions are primarily available under Chapter VI-A of the Income Tax Act, 1961, and include: Section 80C (investments in PPF, ELSS, EPF, life insurance premiums, NSC, home loan principal, tuition fees — up to ₹1.5 lakh), Section 80D (health insurance premiums — up to ₹25,000 for self and family, additional ₹25,000 for parents), Section 80CCD(1B) (additional NPS contribution — ₹50,000 exclusive deduction), Section 24(b) (home loan interest — up to ₹2 lakh for self-occupied property), Section 80TTA (savings bank interest — up to ₹10,000), and Section 80G (charitable donations). Under the New Tax Regime (effective FY2023-24 as the default), most of these deductions are not available except for the Standard Deduction of ₹75,000 and NPS employer contribution — making the old regime with deductions potentially more beneficial for investors with large Section 80C and home loan commitments in higher tax brackets. Maximising eligible deductions under the old regime through strategic investment planning — particularly before the March 31 financial year end — is a fundamental component of tax-efficient wealth management for Indian salaried employees and self-employed individuals.