Income Tax Deductions List FY 2026-27 (80C to 80U)

What are Income Tax Deductions?

Income tax deductions are amounts you can subtract from your gross total income before tax is calculated. In simple terms, they bring down the income on which you pay tax.

These deductions usually come from eligible investments, insurance premiums, retirement contributions, medical expenses, education loans, home loans, donations, or certain personal situations such as disability. Some deductions are linked to how much you spend. Others are flat benefits if you meet the conditions. For most individuals, deductions matter most when they choose the old tax regime. Under the new tax regime, many common deductions such as Section 123, Section 124, Section 127, and Section 128 are generally not available.

Income Tax Deduction Under Section 123

Section 123 (previously known as Section 80C) is still the most widely used tax-saving section in India. It allows a deduction of up to ₹1.5 lakh in a financial year for eligible investments and payments.

Common tax-saving options covered under Section 123 include:

Life insurance premiums
Employee Provident Fund (EPF)
Public Provident Fund (PPF)
Equity Linked Savings Scheme (ELSS)
National Savings Certificate (NSC)
Sukanya Samriddhi Yojana
Five-year tax-saving fixed deposits
Home loan principal repayment
Tuition fees paid for up to two children

This section works well because it combines tax saving with long-term planning. A life insurance premium, for example, does not just help with tax. It also protects your family financially.

Income Tax Deductions List - Deduction Limits Under Section 123 and 124 of the Income Tax Act, 2025

Section 123 of the Income Tax Act, 2025 covers contributions to pension and annuity plans from insurance companies. Your own contributions to the Tier 1 account of NPS are also deductible here. Salaried employees can deduct up to 10% of their salary (basic + DA), while self-employed individuals get up to 20% of their gross total income.

Moreover, NPS gives you an additional deduction of up to ₹50,000 through Section 124 (previously known as Section 80CCD(1B)). It is completely separate from the ₹1.5 lakh cap under Section 123.

It is worth noting that if you have already used the full ₹1.5 lakh under Section 123 through EPF, life insurance premiums, and PPF, you can still claim another ₹50,000 by investing in NPS under Section 124. That is why NPS often becomes the extra tax-saving tool for salaried taxpayers with a cap at ₹2 lakh.

Income Tax Deduction Under Section 126

Section 126 (previously known as Section 80D) covers health insurance premiums and certain preventive health check-ups. It is one of the most useful deductions because it rewards important expenses like health insurance premiums. The deduction limits generally work like this under the old tax regime:

Up to ₹25,000 for health insurance premiums paid for self, spouse, and dependent children.
Additional up to ₹25,000 for parents if they are below 60 years.
Additional up to ₹50,000 for parents if they are senior citizens.
If the taxpayer is a senior citizen, the self-family limit can go up to ₹50,000.
Preventive health check-up is allowed within the overall limit, up to ₹5,000.

If you are paying a premium for yourself and your senior citizen parents, the total deduction can go up to ₹75,000 or even ₹1 lakh in some cases.

Income Tax Deduction Under Section 127

Section 127 (previously known as Section 80DD) gives a deduction when you spend on the medical treatment, nursing, or rehabilitation of a dependent with disability. It also covers amounts paid under approved schemes for the maintenance of such dependents.

The deduction is fixed, not reimbursement-based. It offers:

₹75,000 deduction for disability of at least 40%.
₹1.25 lakh for severe disability of 80% or more.

This deduction is available for dependent spouses, children, parents, brothers, or sisters. You should take note that the dependent should not have claimed a deduction under Section 80U to avail of this deduction.

Income Tax Deduction Under Section 128

Section 128 (previously known as Section 80DDB) applies when a taxpayer spends on treatment for specified diseases for self or a dependent. These usually include serious illnesses like neurological diseases, malignant cancers, AIDS, listed under the tax rules.

The deduction allowed is:

Up to ₹40,000 for non-senior citizens.
Up to ₹1 lakh for senior citizens.

The actual deduction is the lower of the amount spent or the prescribed limit. You will need the required medical certificate or prescription in the prescribed format.

Income Tax Deduction Under Section 130

Section 130 (previously known as Section 80EE) gives an additional deduction on home loan interest for first-time home buyers. The deduction can go up to ₹50,000 per year.

This section applies only if the original loan met specific conditions, including:

Loan sanctioned between 1 April 2016 and 31 March 2017
Loan amount not more than ₹35 lakh
Property value not more than ₹50 lakh
The taxpayer did not own any other residential house on the loan sanction date

So, this section still matters for some borrowers, but only for those who qualify under specified conditions. It is not a fresh benefit for new loans in FY 2026-27.

Income Tax Deduction Under Section 131

Section 131 (previously known as Section 80EEA) offers an additional deduction of up to ₹1.5 lakh on interest paid on certain affordable housing loans.

This benefit was available where the home loan was sanctioned between 1 April 2019 and 31 March 2022, subject to the prescribed conditions. A taxpayer claiming Section 131 cannot claim Section 130 for the same year.

It is to be noted that this is not a fresh entry route for new borrowers in FY 2026-27. But if you already qualified under the earlier conditions, you may continue to claim the deduction as long as the loan remains eligible.

Income Tax Deduction Under Section 132

Section 132 (previously known as Section 80EEB) applies to interest paid on loans taken for the purchase of an electric vehicle. The maximum deduction is ₹1.5 lakh.

Key conditions include:

The deduction is available only to all the individuals.
The loan should have been sanctioned between 1 April 2019 and 31 March 2023.
The taxpayer should not own another electric vehicle loan deduction under this section for the same interest.

Like Section 131, this benefit mainly helps those who qualified within the original loan window (1 April 2019 and 31 March 2023). For FY 2026-27, it remains relevant only for continuing eligible claims.

Income Tax Deduction Under Section 134

Section 134 (previously known as Section 80GG) helps taxpayers who pay rent but do not receive House Rent Allowance (HRA). This usually helps self-employed people or salaried employees who do not get HRA as part of their salary structure.

The deduction is the least of the following:

₹5,000 per month
25% of adjusted total income
Actual rent paid minus 10% of adjusted total income

There are conditions as well. You, your spouse, minor child, or HUF should not own a residential property at the place where you ordinarily live or work. You also need to file the required declaration to claim this deduction.

Income Tax Deduction Under Section 137

Section 137 (previously known as Section 80GGC) allows a deduction for contributions made to a political party or an electoral trust. A few important points to remember:

The deduction is available to individuals, not companies.
The contribution must be made through non-cash modes.
Cash donations do not qualify.
The deduction can go up to 100% of the amount contributed, subject to conditions.

Income Tax Deduction Under Section 154

Section 154 (previously known as Section 80U) is for an individual taxpayer who has a disability. Unlike Section 127, this one applies to the taxpayer personally, not to a dependent.

The deduction allowed is:

₹75,000 for disability of at least 40%.
₹1.25 lakh for severe disability of 80% or more.

The deduction is fixed and does not depend on actual spending. You need to provide a valid disability certificate to claim this deduction.

Income Tax Deduction Under Section 24(b)

Section 24(b) allows deduction for interest paid on a home loan for a house property. The main rules are:

For a self-occupied house, deduction can go up to ₹2 lakh per year, subject to conditions.
For a let-out property, the actual interest can be claimed under house property rules, though set-off of house property loss against other income is generally restricted to ₹2 lakh in a financial year.

This section is separate from Section 123. That means you can claim home loan principal under Section 123 and interest under Section 24(b), if you meet the conditions. That is why home loans often create a double tax benefit.

Income Tax Deduction Under Section 129

Section 129 (previously known as Section 80E) gives a deduction on interest paid on an education loan taken for higher education. Let us see what makes this section attractive:

There is no upper monetary limit on the interest deduction.
The deduction is available for up to 8 assessment years, starting from the year in which repayment begins.
It applies only to the interest component, not the principal.
The loan must be taken from a financial institution or an approved charitable institution.

This deduction can be claimed for education loans taken for self, spouse, children, or a student for whom you are the legal guardian.

Income Tax Deduction Under Schedule III(13)

Schedule III(13) (previously known as Section 10(14)) covers certain allowances given by an employer. These are exempt either to the extent actually spent for official duties or up to prescribed limits.

Common examples include:

Travel allowance for tour or transfer
Daily allowance during travel
Conveyance allowance for official work
Helper allowance
Uniform allowance
Research or academic allowance in eligible cases
Children’s education allowance, subject to prescribed limit
Hostel expenditure allowance, subject to prescribed limit
Transport allowance for specially-abled employees, subject to prescribed limit

This section matters mainly for salaried employees. But you should not add every allowance into it because HRA and LTA, for instance, fall under separate provisions.

Income Tax Deduction Under Section 133

Section 133 (previously known as Section 80G) allows deduction for donations made to approved charitable institutions, relief funds, and certain notified entities.

The deduction may be:

100% of the donation without qualifying limit
50% of the donation without qualifying limit
100% with the qualifying limit
50% with qualifying limit

Where a qualifying limit applies, it is generally linked to 10% of adjusted gross total income. Cash donations above ₹2,000 do not qualify for deduction. This is one section where paperwork matters. Hence, you should keep the donation receipt, PAN of the trust if applicable, and registration details.

Income Tax Deduction Under Section 153

This section deals with interest income, but they apply to different taxpayers. It is worth knowing that Sections 80TTA and 80TTB of the Income Tax Act, 1961 have been replaced by Section 153 of the Income Tax Act, 2025, which comes into force from April 1, 2026.

Section 80TTA

Section 80TTA, now covered under Section 153 of the Income Tax Act, 2025, allows a deduction of up to ₹10,000 on interest earned from savings accounts held with banks, co-operative banks, or post offices.

It is available to:

Individuals other than senior citizens
HUFs

It is important to note that it does not apply to interest from fixed deposits or recurring deposits.

Section 80TTB

Section 80TTB, now the senior citizen provision within Section 153, is meant exclusively for those aged 60 and above. It allows a deduction of up to ₹50,000 on interest income from deposits with banks, post offices, and eligible co-operative institutions.

This provision is broader than the one for general taxpayers. It covers savings account interest as well as interest from fixed and recurring deposits. A senior citizen cannot claim both provisions. If Section 80TTB (Section 153 for senior citizens) applies to you, that’s the only one you can use.

Income Tax Deduction Under Section 152

Section 152 (previously known as Section 80RRB) gives a deduction to resident individuals for royalty income from patents registered under the Patents Act, 1970. The deduction is the lower of:

Actual royalty income, or
₹3 lakh

This section comes with conditions, especially when royalty is received from outside India. In such cases, the amount should generally be brought into India in the prescribed manner.

Income Tax Deduction Under Section 151

Section 151 (previously known as Section 80QQB) applies to resident authors who earn royalty income from certain books. It does not apply to every kind of publication. The deduction is the lower of:

Actual royalty income, or
₹3 lakh.

If royalty is not received as a lump sum and is based on book sales, the deduction may be restricted to 15% of the value of books sold during the year.

This section generally covers literary, artistic, or scientific books, but not textbooks, journals, newspapers, diaries, or similar publications.

LTA (Leave Travel Allowance) Under Schedule III(8)

LTA covers actual travel expenses within India for yourself and your immediate family. It can be claimed twice in a 4-year block. The current block runs from 2026 to 2029. Only transport costs qualify; hotel stays and meals are not covered under this.

EPF and Provident Fund Contributions

Your 12% EPF contribution counts under Section 123. The employer’s contribution and PF interest are tax-free up to a point:

Employer’s PF Contribution: Tax-free up to 12% of salary
PF Interest: Tax-free on annual contributions up to ₹2.5 lakh (₹5 lakh for government employees where there’s no employer PF contribution)

Gratuity Under Schedule III(38)

For private sector employees, gratuity received on retirement, resignation, or death is tax-free up to ₹20 lakh. Government employees enjoy a full tax exemption on gratuity with no cap.

Other Exemptions

Here are some other exemptions you can benefit from:

Exemption	Limit	Section
Children’s Education Allowance	₹100/month per child (max 2 children)	Schedule III(12)
Hostel Expenditure Allowance	₹300/month per child (max 2 children)	Schedule III(12)
Professional Tax	Full deduction	Section 16(iii)

Income Tax Deduction Under Section 80CCG

Section 80CCG was introduced under the Rajiv Gandhi Equity Savings Scheme. However, this deduction is no longer available for fresh claims.

For FY 2026-27, most taxpayers should treat Section 80CCG as a non-operational provision. If you are building a current deduction list, this section is largely historical and not a current tax-saving route anymore.

Income Tax Exemptions for Salaried Employees 2025-26

For salaried taxpayers, tax planning is not just about Section 123, but salary structure matters too. Common exemptions and tax benefits typically used by salaried employees under the old tax regime include:

House Rent Allowance (HRA), subject to conditions
Leave Travel Allowance (LTA), for eligible travel claims
Allowances covered under Schedule III(13), where applicable
Standard deduction, as permitted under the chosen regime
Employer contribution to NPS under Section 80CCD(2), where eligible
Deduction for professional tax, where relevant under salary computation
Home loan benefits under Section 24(b) and 123
Health insurance deduction under Section 126

One thing to keep in mind is that the new tax regime is now the default regime, and many old exemptions and deductions are not available there. So a salaried employee should not assume that every tax-saving item will work automatically. It is recommended to run the numbers first and then decide.

Wrapping Up

The income tax deductions for FY 2026-27 can help you reduce tax liability in a meaningful way, but only if you choose the right regime and claim the right sections. Section 123 may be the starting point, though it should not be the whole plan. Home loan interest, health insurance, NPS, education loan interest, rent paid, and donations can also make a difference.

The real smart move is that you should not treat deductions as a last-minute move. Go through the numbers under both regimes with your actual income and likely deductions, then pick the one that results in a lower tax amount. You can take the help of a tax calculator or chartered accountant to do this in minutes and plan your finances better.

FAQs on Income Tax Deduction List

What is the maximum deduction allowed under Section 123 for FY 2026-27?

The maximum deduction under Section 123 is ₹1.5 lakh per financial year. This limit is shared with Sections 80CCC and 80CCD(1) under the combined limit of Section 80CCE.

Are these deductions available under the New Tax Regime?

No, most deductions under Sections 123 through 80U are not available under the new tax regime. The main exceptions are the standard deduction (₹75,000 for salaried employees) and the employer’s NPS contribution deduction under Section 80CCD(2). If you want to claim Section 123, 126, or other Chapter VI-A deductions, you need to file under the old tax regime.

Can I claim both Section 80TTA and 80TTB in the same year?

No. Section 80TTA applies to individuals below 60 years of age. Section 80TTB applies to senior citizens (60 and above) and covers a wider range of deposits with a higher limit of ₹50,000. Senior citizens must use 80TTB, as they cannot claim both.

Is Section 80CCG still active for FY 2026-27?

No. Section 80CCG (Rajiv Gandhi Equity Savings Scheme) was discontinued after FY 2017-18. No new claims can be made for FY 2026-27.

What is the difference between Section 127 and Section 80U?

Section 127 is claimed by a taxpayer who financially supports a disabled dependent, such as a spouse, child, or parent. Section 80U is claimed by the taxpayer themselves if they have a certified disability. Both offer flat deductions: ₹75,000 for standard disability and ₹1,25,000 for severe disability (80% or more).

Can I claim Section 131 on a home loan taken in 2025?

No. Section 131 covers loans sanctioned between April 1, 2019 and March 31, 2022. Loans taken after March 2022 do not qualify for this additional deduction. You can still claim the regular home loan interest deduction under Section 24(b), subject to its applicable limits.

What documents are needed to claim a deduction under Section 133?

You need the official donation receipt with the organization’s full name and PAN. Cash donations above ₹2,000 do not qualify regardless of documentation. You should always verify that the organization’s Section 133 approval is current because approvals have an expiry date.

Is the home loan interest deduction under Section 24(b) available under the new tax regime?

For self-occupied properties, Section 24(b) interest deduction is not available under the new tax regime. For let-out properties, the rules are a bit complicated and depend on how house property income is computed. If you own a rented-out property and are considering the new tax regime, consult a chartered accountant before filing.

Can I claim Section 80CCD(2) even if I file under the new tax regime?

Yes, Section 80CCD(2), which covers your employer’s contribution to your NPS account, is one of the very few deductions available under the new tax regime. The limit is 10% of salary for private sector employees and 14% for Central Government employees.

Income Tax Deductions List - Deductions on Section 80C to 80U FY 2025-26 (AY 2026-27)