Maximum Income Tax Deductions Available for Salaried Employees

 Understanding the complete spectrum of tax deductions can significantly reduce your tax liability. Here's a comprehensive breakdown of maximum deductions available to salaried employees in FY 2025-26, organized by category with actual limits and eligibility criteria.

Standard and Employment-Related Deductions

Standard Deduction

• Old Tax Regime: ₹50,000
• New Tax Regime: ₹75,000
• Eligibility: All salaried employees and pensioners
• Documentation: No proof required; automatic deduction

HRA (House Rent Allowance) - Section 10(13A)

• Maximum: No fixed limit; depends on calculation
• Formula: Minimum of actual HRA received, rent paid minus 10% of salary, or 50%/40% of salary (metro/non-metro)
• Example: On ₹5 lakh salary in Delhi with ₹2 lakh rent, maximum exemption is ₹1.5 lakh
• Documentation: Rent receipts, landlord's PAN if annual rent exceeds ₹1 lakh

Professional Tax

• Maximum: Up to ₹2,500 annually
• Eligibility: Automatic deduction from salary where applicable

Major Investment Deductions (Old Tax Regime Only)

Section 80C, 80CCC, 80CCD(1) Combined

• Maximum: ₹1,50,000 total limit
• Includes: PPF, ELSS, life insurance premiums, home loan principal, NSC, tuition fees, EPF contributions
• Note: Combined ceiling of ₹1.5 lakh for all three sections

Section 80CCD(1B) - Additional NPS

• Maximum: ₹50,000 (over and above 80CCE limit)
• Total Possible: ₹2 lakh when combined with 80C/CCC/CCD(1)

Section 80CCD(2) - Employer's NPS Contribution

• Government Employees: 14% of basic salary + DA
• Private Employees: 10% of basic salary + DA
• Note: Available in both old and new tax regimes

Health and Medical Deductions

Section 80D - Health Insurance

Self and Family:

• Below 60 years: ₹25,000
• Above 60 years: ₹50,000

Parents:

• Below 60 years: ₹25,000
• Above 60 years: ₹50,000

Preventive Health Checkup: ₹5,000 (within overall limits)

Maximum Possible: ₹1,00,000 if both self and parents are senior citizens

Section 80DDB - Critical Illness Treatment

• General: ₹40,000
• Senior Citizens: ₹1,00,000

Section 80DD - Disability Dependent

• Normal Disability: ₹75,000
• Severe Disability: ₹1,25,000

Education and Loan Deductions

Section 80E - Education Loan Interest

• Maximum: No limit on interest amount
• Duration: Up to 8 years from first repayment
• Eligibility: Self, spouse, children, or legal ward
• Documentation: Interest certificate from lender

Section 24(b) - Home Loan Interest

• Self-Occupied Property: ₹2,00,000
• Let-Out Property: No limit
• Pre-Construction Interest: Allowed over 5 years

Section 80EE - Additional Home Loan Interest

• Maximum: ₹50,000 (for loans between April 2016-March 2017)
• Conditions: First-time buyer, property value ≤₹50 lakh, loan ≤₹35 lakh

Section 80EEA - Affordable Housing

• Maximum: ₹1,50,000 (for loans between April 2019-April 2022)
• Conditions: First-time buyer, property value ≤₹45 lakh

Other Significant Deductions

Section 80G - Donations

• Maximum: 50% or 100% of donation amount depending on institution
• Cash Limit: ₹2,000 maximum in cash

Section 80TTA/80TTB - Interest Income

• 80TTA (Below 60): ₹10,000 on savings account interest
• 80TTB (60+ years): ₹50,000 on all deposit interest

Section 80U - Self Disability

• Normal Disability: ₹75,000
• Severe Disability: ₹1,25,000

Maximum Theoretical Deduction Scenario

For a senior citizen salaried employee with maximum eligible deductions:

Deduction Category	Amount
Standard Deduction	₹50,000
HRA Exemption	Variable (can be substantial)
Section 80C/CCC/CCD(1)	₹1,50,000
Section 80CCD(1B)	₹50,000
Section 80D (Senior Citizen)	₹1,00,000
Section 80E (Education Loan)	No limit
Section 24(b) (Home Loan)	₹2,00,000
Section 80G (Donations)	Variable
Section 80TTB (Interest)	₹50,000
Approximate Total	₹6+ lakh

Important Notes

1. Tax Regime Choice: Most deductions are only available under the old tax regime, except 80CCD(2) and a few others
2. Documentation: Maintain proper receipts, certificates, and proof of payments for all claims
3. Timing: Investments and payments must be made within the financial year to claim deductions
4. Professional Advice: Given the complexity and frequent changes, consult a qualified CA for optimization

The key to maximizing tax savings is understanding which deductions apply to your specific situation and planning investments accordingly throughout the financial year.