What Are The Top 5 ITR Claim Deductions For Reducing Your Income Tax Liability For AY 2025?

If a salaried person chooses the new tax regime for the financial year, they won't be able to claim most deductions. However, if they opt for the old tax regime, they can reduce their tax liability by claiming various deductions. To ensure that less tax is deducted at source (TDS) from their salary, they must submit proof of eligible investments and expenses to their employer.

Here are the top 5 deductions you should consider for AY 2025-26 as A tax deduction lowers your taxable income, which in turn reduces the amount of tax you need to pay.

1. Section 80C - Most Common Deduction (Up to Rs 1.5 lakh)

Under Section 80C, you can claim tax deductions for a variety of common investments and expenses. These include contributions to your Employees' Provident Fund (EPF), Public Provident Fund (PPF), and Equity Linked Savings Schemes (ELSS), as well as premiums paid for life insurance.

You can also claim deductions for repaying the principal amount on a home loan, paying your children's school tuition fees, investing in National Savings Certificates (NSC), and placing money in 5-year fixed deposits with banks or post offices, according to taxguru.com.

2. Section 80D - Health Insurance Premiums (Up to Rs 1 lakh)

Under Section 80D, you can claim tax deductions for health-related expenses. You can get up to Rs 25,000 for health insurance premiums paid for yourself, your spouse, and children. If you've also paid premiums for your parents, you can claim an extra Rs 25,000, or Rs 50,000 if they are senior citizens.

If your senior citizen parents don't have health insurance, you can still claim deductions for their medical expenses. You can also include up to Rs 5,000 spent on preventive health check-ups within these limits.These deductions can be claimed while filing your ITR, even if you didn't submit the proofs to your employer.

3. Section 24(b) - Home Loan Interest (Up to Rs 2 lakh)

You can claim up to Rs 2 lakh per year on interest paid for a self-occupied home loan.This is in addition to the principal repayment deduction you can claim under Section 80C.

4. House Rent Allowance (HRA)

If you pay rent and get House Rent Allowance (HRA) as part of your salary, you can claim a tax deduction. The amount you can claim depends on your actual rent, your salary, and the city you live in. To claim this deduction, make sure you keep your rent receipts and your landlord's PAN details ready when filing your income tax return.

5. Section 80E - Education Loan Interest

Under Section 80E, you can claim a tax deduction for the full amount of interest paid on an education loan. This deduction is available for up to 8 years, starting from the year you begin repaying the loan. It can be claimed whether the education is in India or abroad.

Other Helpful Deductions to Keep in Mind:

Here are the other tax deductions along with the top 5 mentioned above according to taxguru and tax2win.

Sections 80TTA & 80TTB - Savings Interest: Up to Rs 10,000 for interest earned from savings accounts (for non-senior citizens). Up to Rs 50,000 for senior citizens, including interest from savings, fixed deposits, and post office schemes.

Section 80G - Donations: If you are eligible, then you can get 50% to 100% deduction on donations made to approved charities and relief funds.

Section 80CCD(1B) - NPS Investment: Additional Rs 50,000 deduction for investing in the National Pension System, over and above the Rs 1.5 lakh limit under Section 80C.

Standard Deduction: A flat Rs 50,000 deduction is available to all salaried individuals and pensioners without any documents.

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