Tax saving beyond 80C

Every January, the same ritual plays out in every office in India. People who have not thought about tax for ten months suddenly dump money into ELSS, PPF, or an LIC policy an uncle recommended, all to fill the Rs 1.5 lakh 80C bucket before the payroll deadline. Then they stop thinking for another ten months.

The scramble itself is the first mistake. The second is assuming 80C is where tax saving ends. Depending on your situation, there is another Rs 1 to 2 lakh of deductions available beyond it. But in 2026, before any of that, there is a question that decides everything else: which regime are you in?

First, the regime question

Most of the deductions in this article, 80C included, exist only in the old regime. The new regime, now the default, strips almost all of them and compensates with lower slab rates and a Rs 75,000 standard deduction for salaried taxpayers. For a large number of salaried people, the new regime wins on arithmetic alone, and the entire January scramble is unnecessary.

So the order of operations is: compute your tax under both regimes first. If the new regime wins, skip to the one deduction below that survives it. If the old regime wins, the rest of this article is your checklist. In 2026 the Income-tax Act 2025 is in force, and it renumbered everything. Section 80C is now Section 123. The deductions did not change, only the section numbers did, and every payroll portal still uses the old names.

The one deduction that survives the new regime

Section 80CCD(2), the employer’s NPS contribution, is the standout. Your employer can contribute up to 14% of your basic salary plus DA to NPS, and that amount is deductible with no monetary ceiling, under both regimes. If your employer offers this and you have not opted in, you are declining a benefit that can be worth Rs 50,000 to Rs 2 lakh a year depending on your salary. This is usually a payroll conversation, not an investment decision.

80CCD(1B): the extra Rs 50,000 almost nobody claims

Under the old regime, your own NPS contribution gets an additional Rs 50,000 deduction under 80CCD(1B), completely separate from the Rs 1.5 lakh 80C limit. For someone in the 30% bracket, that is about Rs 15,600 saved every year. NPS locks your money until retirement and forces an annuity on part of the corpus, so it is not free money, but if you were going to build a retirement corpus anyway, doing the first Rs 50,000 of it here is close to a free option.

80D: the deduction you should not need tax to justify

Health insurance premiums are deductible under 80D: up to Rs 25,000 for yourself and family, and another Rs 25,000 for parents, which becomes Rs 50,000 if they are senior citizens. A family covering itself plus senior parents can deduct up to Rs 75,000 a year. I list this second only because of size. In substance it comes first: if the reason you do not have adequate health cover is that nobody made it tax-efficient enough for you, your priorities need rearranging, not your deductions.

The situation-dependent ones

A home loan on a self-occupied house gives you up to Rs 2 lakh of interest deduction under Section 24(b), on top of the principal that already sits inside 80C. An education loan gives you a full deduction on the interest under 80E, with no cap, for eight years. Senior citizens get Rs 50,000 of interest income exempt under 80TTB. Donations to specified institutions qualify under 80G, though the list of eligible funds keeps shrinking. HRA, if you rent, remains one of the largest deductions salaried people claim, and it is old-regime only.

None of these is a reason to take a loan or make a donation. They matter when the expense already exists in your life.

The mistake to avoid

The classic error is buying a product for the deduction. An insurance-cum-investment policy bought in February to fill 80C costs far more in poor returns and lock-ins than the tax it saves. The deduction is the discount, not the product. If the underlying instrument is something you would not buy without the tax break, the tax break is not a good enough reason.

Read: 54EC bonds

The January scramble exists because tax planning is the only financial decision most people make under deadline. The fix is boring: pick your regime in April, set up the employer NPS contribution once, keep the health insurance renewed, and let the deductions take care of themselves. February then becomes just another month.