Planning
Deductions that still matter under the old regime
A practical checklist of old-regime deductions for FY 2025-26, and how large they must be to win.
By Meera Krishnan4 min read
The new regime is the default for FY 2025-26 (AY 2026-27), and for many people it is the better deal. But the old regime has not disappeared. If you already pay rent, a home loan or an education loan, the deductions it allows can still outweigh the new regime’s lower rates. This checklist covers the deductions that carry the most weight, and then shows how to test whether they are enough.
The big ones
HRA exemption (section 10(13A)). If you live in rented housing and your salary includes house rent allowance, part of that allowance can be exempt. The exempt amount depends on your HRA, salary and rent, and for many renters in large cities it is the single biggest item. Keep rent receipts and the landlord’s PAN where your employer asks for it.
Home-loan interest (section 24(b)). Interest on a loan for a self-occupied house is deductible up to ₹2 lakh a year. Principal repayment counts separately under 80C.
Section 80C, up to ₹1.5 lakh. One combined limit covers:
- your EPF contribution
- PPF deposits
- ELSS mutual funds
- life insurance premiums
- principal repaid on a home loan
- children’s tuition fees
- five-year tax-saving fixed deposits
Salaried people often fill most of this through EPF alone, so check your payslip before investing more.
The useful extras
- 80CCD(1B), NPS: an extra ₹50,000 for your own NPS contributions, over and above the 80C limit.
- 80D, health insurance: ₹25,000 for yourself, spouse and children (₹50,000 if you are a senior citizen), plus another ₹25,000 for parents, or ₹50,000 if they are senior citizens.
- 80E, education loan: all the interest on a loan for higher education, with no cap, for up to eight years.
- 80G, donations: deductions for donations to eligible funds and charities, at rates that depend on the recipient.
- 80TTA: up to ₹10,000 of savings-account interest (seniors use 80TTB instead, up to ₹50,000).
- LTA: leave travel allowance for domestic travel, within your employer’s rules.
Example 1: big deductions, still no contest
Kiran earns a salary of ₹12,00,000 and has an impressive set of deductions: 80C ₹1,50,000, 80CCD(1B) ₹50,000, 80D ₹75,000 (₹25,000 for himself and ₹50,000 for senior-citizen parents) and home-loan interest of ₹2,00,000. Total: ₹4,75,000.
Old regime: ₹12,00,000 − ₹50,000 standard deduction − ₹4,75,000 = ₹6,75,000 taxable.
- ₹2.5–5 lakh at 5%: ₹12,500
- ₹5–6.75 lakh at 20%: ₹35,000
- Tax ₹47,500 + 4% cess ₹1,900 = ₹49,400
New regime: ₹12,00,000 − ₹75,000 = ₹11,25,000 taxable, under the ₹12 lakh rebate limit, so tax is nil.
Nearly ₹5 lakh of deductions and the old regime still costs him ₹49,400. Below roughly ₹12.75 lakh of salary, the new regime almost always wins.
Example 2: where the break-even sits at ₹25 lakh
Nisha earns ₹25,00,000. Under the new regime her taxable income is ₹24,25,000:
- Tax up to ₹24 lakh: ₹3,00,000
- ₹25,000 at 30%: ₹7,500
- Tax ₹3,07,500 + cess ₹12,300 = ₹3,19,800
Under the old regime she starts from ₹24,50,000 after the ₹50,000 standard deduction. Tax of ₹3,07,500 before cess is reached at a taxable income of ₹16,50,000 (₹1,12,500 on the first ₹10 lakh plus 30% of ₹6,50,000). So she needs more than ₹8,00,000 of deductions for the old regime to come out ahead.
With HRA exemption of ₹3,00,000, 80C ₹1,50,000, 80CCD(1B) ₹50,000 and 80D ₹75,000 she has ₹5,75,000 — not enough. Her old-regime taxable income would be ₹18,75,000, giving tax of ₹1,12,500 + 30% of ₹8,75,000 (₹2,62,500) = ₹3,75,000, or ₹3,90,000 with cess. The new regime saves her ₹70,200.
How to use this checklist
- List only deductions you will claim anyway — rent you already pay, EMIs already running, insurance you need.
- Total them and compute your old-regime taxable income.
- Find your break-even as in Example 2 and compare.
- If you are salaried, you can make the choice afresh each year in a return filed on time. Freelancers with business income must opt out through Form 10-IEA and can switch back only once.
Spending money purely to create a deduction rarely makes sense now. Let the deductions you already have decide the regime, not the other way round.
General information, not tax advice. Rules change, so check the latest rules or speak to a CA before you act.