Tax Saving Under New Income Tax Act 2025: All Deductions Mapped
Tax saving deductions under the New Income Tax Act, 2025, retain the same limits but move to entirely new section numbers effective Tax Year 2026-27. Your ₹1,50,000 PPF investment still saves tax, but your Form 16 shows Section 123 instead of 80C from April 2026. Chapter VIA (Sections 80A to 80U) becomes Chapter VIII, starting from Section 122. Section 80C consolidates into Section 123, Section 80D becomes Section 126, and Section 80CCD(1B) moves to Section 124(3). Deduction limits stay identical to Tax Year 2025-26. What changes is the legal architecture and, critically, which regime allows you to claim these deductions. The new default regime sharply restricts Chapter VIII access, while the old regime preserves the full deduction set. This guide maps every major deduction from the Income Tax Act, 1961, to its Income Tax Act, 2025, equivalent, presents the revised tax slabs, and gives you a concrete framework for making the right regime decision.
- Section 80C (₹1,50,000 limit) becomes Section 123 under Chapter VIII, effective Tax Year 2026-27, covering PPF, ELSS, LIC, NSC, EPF, and all Schedule XV investments.
- Section 80D (health insurance) becomes Section 126; limits unchanged at ₹25,000 (₹50,000 for senior citizens) for self and family.
- The new default regime allows no Chapter VIII deductions except the ₹75,000 standard deduction and employer NPS under Section 124(2).
- NPS gets Section 124: employer contribution under Section 124(2), additional self-contribution of ₹50,000 under Section 124(3).
- New regime delivers zero tax on gross income up to ₹12,75,000 for salaried employees via the full tax rebate.
- To claim any Chapter VIII deduction, taxpayers must opt for the old regime before the return filing due date each Tax Year.
What is the New Income Tax Act, 2025?
The New Income Tax Act, 2025, replaces the Income Tax Act, 1961, effective April 1, 2026. Parliament passed it through Finance Act 2025, and the Central Board of Direct Taxes (CBDT) administers the transition. The full text and supporting circulars are available at incometax.gov.in.
The Income Tax Act, 2025, received parliamentary approval through Finance Act 2025. CBDT has issued circulars on the transition for pending assessments, existing investments, and updated ITR forms. All Form 16, ITR, and notice references shift to new section numbers from Tax Year 2026-27 (April 1, 2026 onwards). Assessments for Tax Years up to 2025-26 continue under the Income Tax Act, 1961, provisions.
The new act does not alter tax rates or deduction limits for individual taxpayers. Its purpose is structural: clearer language, logical numbering, and elimination of obsolete provisions accumulated over 64 years of amendments. The most significant terminological change is the replacement of "Previous Year" and "Assessment Year" with a single unified "Tax Year." Exemptions previously listed under Section 10, which ran across dozens of subsections, now sit under Section 11 and Schedules II through VII of the new act.
The new act is a legislative rewrite replacing the Income Tax Act, 1961, from April 1, 2026 (Tax Year 2026-27). Introduced through Finance Act 2025 and administered by CBDT, it reorganizes the tax framework without altering rates or deduction limits for individuals. Chapter VIA (Sections 80A to 80U) becomes Chapter VIII (Section 122 onwards). The separate Previous Year and Assessment Year concepts merge into one Tax Year. Exemptions from old Section 10 move to Section 11 and Schedules II to VII. For salaried employees, Form 16, ITR forms, and CBDT notices use new section numbers from Tax Year 2026-27. The act also makes the new tax regime the statutory default, requiring an affirmative opt-in for old regime deductions. Full text and CBDT circulars are available at incometax.gov.in.
For most salaried taxpayers, the practical impact is limited to updating section references in tax planning. A PPF contribution that claimed a deduction under Section 80C in Tax Year 2025-26 claims the same deduction under Section 123 from Tax Year 2026-27. The investment itself does not change. What demands attention is the regime decision: under the new act, the new regime is the default, and accessing Chapter VIII deductions requires an explicit annual choice.
Chapter VIII: The New Deductions Framework
Chapter VIA of the Income Tax Act, 1961, housed all individual deductions in a single chapter, Sections 80A to 80U. That chapter becomes Chapter VIII in the Income Tax Act, 2025, starting from Section 122. The structural logic is identical: Section 122 sets the general conditions (the deduction cannot exceed gross total income), followed by specific deduction sections for different investment and expenditure types.
The transition is not just renumbering. The new act consolidates some old sections. Sections 80C, 80CCC, and 80CCD(1) from the old act collapse into a single Section 123, with eligible investments listed in Schedule XV instead of being enumerated in subsection text. This makes the law cleaner and allows future additions to eligible investments via schedule amendment without requiring a full act amendment.
Which deductions survive under Chapter VIII and which regimes permit them matters far more than the renumbering. Here is the regime position:
- New regime deductions allowed: Standard deduction of ₹75,000 (salaried and pensioners); employer NPS contribution under Section 124(2). That is all.
- Old regime deductions allowed: All Chapter VIII sections, Section 123 through Section 134, plus standard deduction of ₹50,000.
The new regime's restricted deduction list is by design. The regime offers lower slab rates in exchange for fewer deductions. Most salaried employees earning up to ₹12,75,000 gross benefit from the zero-tax outcome under the new regime. Beyond that threshold, the comparison depends on total deductions actually claimable.
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File Your ITR NowSection 123: Replacing the Famous Section 80C
Section 123 of the Income Tax Act, 2025, is the provision most taxpayers need to understand first. It directly replaces the combined deductions under old Sections 80C, 80CCC, and 80CCD(1). The deduction ceiling is ₹1,50,000 per Tax Year, which was the Section 80CCE cap under the old act.
Every investment or expenditure that qualified under old Section 80C qualifies under Section 123. Schedule XV of the new act lists all eligible investments. The list includes:
| Investment / Expenditure | Lock-in Period | Combined Limit |
|---|---|---|
| Public Provident Fund (PPF) | 15 years (partial withdrawal after 6 years) | ₹1,50,000 |
| ELSS Mutual Funds | 3 years | ₹1,50,000 |
| National Savings Certificate (NSC) | 5 years | ₹1,50,000 |
| Employee Provident Fund (EPF) - own contribution | Till retirement | ₹1,50,000 |
| 5-Year Bank Tax-Saving Fixed Deposit | 5 years | ₹1,50,000 |
| Life Insurance Premiums (LIC and others) | Policy term | ₹1,50,000 |
| Sukanya Samriddhi Yojana (SSY) | Till daughter turns 21 | ₹1,50,000 |
| Senior Citizens Savings Scheme (SCSS) | 5 years | ₹1,50,000 |
| Home Loan Principal Repayment | 3 years (property cannot be sold) | ₹1,50,000 |
| Children's Tuition Fees (up to 2 children) | None | ₹1,50,000 |
| NPS Self-Contribution (up to 10% of salary) | Till age 60 | ₹1,50,000 combined |
| Pension Fund Contributions (80CCC equivalent) | Policy term | ₹1,50,000 combined |
The ₹1,50,000 limit is aggregate across all Section 123 investments. Investing ₹1,50,000 in PPF alone exhausts the Section 123 ceiling; adding ELSS on top provides no further deduction. Taxpayers who invest across multiple instruments must track the combined total.
Section 123 is available only under the old tax regime. If you choose the new regime, all investments in PPF, ELSS, NSC, and other Schedule XV instruments continue to earn returns and exemptions under Section 11, but the upfront deduction at contribution is not available. At the 30% tax slab, maximizing Section 123 (₹1,50,000) saves ₹46,800 in tax annually (including 4% cess). At the 20% slab, the saving is ₹31,200.
If your EPF contribution alone exceeds ₹1,50,000 annually (common at higher salaries), you have already exhausted the Section 123 limit via EPF. Investing additionally in PPF or ELSS will not increase your Section 123 deduction. Redirect those funds toward Section 124(3) NPS contributions instead, which provides an additional ₹50,000 deduction on top of the Section 123 ceiling.
Section 124: NPS Deductions Reimagined
NPS deductions split across two old sections: Section 80CCD(1B) for the additional ₹50,000 self-contribution and Section 80CCD(2) for employer contribution. The Income Tax Act, 2025, consolidates both under Section 124, with distinct subsections for each component.
Section 124(2): Employer NPS Contribution
Section 124(2) covers the employer's contribution to an employee's NPS account. The deduction limit is 14% of basic salary (including dearness allowance) for central and state government employees, and 10% of basic salary for private sector employees. This deduction is one of the very few Chapter VIII provisions available under both old and new regimes. If your employer contributes to your NPS, you benefit from Section 124(2) regardless of which regime you choose.
Section 124(3): Additional Self-Contribution
Section 124(3) is the new act's equivalent of old Section 80CCD(1B). It provides an additional ₹50,000 deduction for voluntary NPS self-contributions, entirely separate from and additional to the Section 123 ceiling of ₹1,50,000. This section is available only under the old regime.
The combined NPS deduction picture under the old regime:
| Component | New Section | Old Section | Limit | Regime |
|---|---|---|---|---|
| NPS Self-Contribution (up to 10% salary) | Section 123 | 80CCD(1) | ₹1,50,000 combined | Old only |
| Additional NPS Self-Contribution | Section 124(3) | 80CCD(1B) | ₹50,000 | Old only |
| Employer NPS Contribution | Section 124(2) | 80CCD(2) | 14% / 10% of salary | Both regimes |
An employee in the 30% tax slab who maximizes Section 124(3) at ₹50,000 saves ₹15,600 in tax (including cess) annually. When combined with full Section 123 utilization of ₹1,50,000, the total NPS-linked tax saving reaches ₹62,400 per year at the 30% slab rate with cess. For the long-term investor, NPS also provides a tax-free withdrawal of 60% of the corpus at retirement, making it one of the most tax-efficient instruments available under the old regime.
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Get Expert ITR HelpSection 126: Health Insurance Deductions
Section 126 of the Income Tax Act, 2025, replaces old Section 80D with identical limits and conditions. The section covers deductions for health insurance premiums paid for self, family (spouse and dependent children), and parents.
The deduction structure under Section 126:
| Insured Persons | Deduction Limit | Senior Citizen Limit |
|---|---|---|
| Self, spouse, and dependent children | ₹25,000 | ₹50,000 (if taxpayer is a senior citizen) |
| Parents | ₹25,000 | ₹50,000 (if parents are senior citizens) |
| Maximum combined deduction (non-senior taxpayer, non-senior parents) | ₹50,000 | N/A |
| Maximum combined deduction (senior taxpayer + senior parents) | N/A | ₹1,00,000 |
| Preventive health check-up (within aggregate limit) | ₹5,000 (cash payment permitted) | |
Health insurance premiums must be paid by any mode other than cash for the deduction to apply. The preventive health check-up sub-limit of ₹5,000 is the only component that allows cash payment. Both limits together cannot exceed the aggregate Section 126 limit for the relevant category.
Section 126, like Section 80D before it, is available only under the old regime. Under the new regime, health insurance premiums provide no tax deduction, though the investment in health coverage itself remains important for financial protection.
A taxpayer below 60 who pays ₹25,000 in premiums for self and family and ₹25,000 for non-senior parents claims ₹50,000 under Section 126, saving ₹10,400 at the 20% slab with cess or ₹15,600 at the 30% slab with cess. If parents are senior citizens, the combined deduction rises to ₹75,000, saving ₹23,400 at the 30% slab.
Complete Old Section to New Section Mapping Table
The table below covers every major Chapter VIA deduction and its Chapter VIII equivalent. Use this as a reference when reviewing your Form 16 from Tax Year 2026-27, filing your ITR, or advising your HR team on salary structure updates.
| Old Section | Old Description | New Section | New Description | Deduction Limit | Regime |
|---|---|---|---|---|---|
| 80C + 80CCC + 80CCD(1) | Investments in PPF, ELSS, LIC, NSC, EPF, pension funds, NPS self-contribution | Section 123 (read with Schedule XV) | Deduction for investments listed in Schedule XV | ₹1,50,000 combined | Old only |
| 80CCD(1B) | Additional NPS self-contribution | Section 124(3) | Additional deduction for NPS self-contribution | ₹50,000 | Old only |
| 80CCD(2) | Employer NPS contribution | Section 124(2) | Employer contribution to NPS | 14% / 10% of salary | Both regimes |
| 80D | Health insurance premiums | Section 126 | Deduction for health insurance premiums | ₹25,000 / ₹50,000 (senior citizens) | Old only |
| 80DD | Maintenance and treatment of disabled dependent | Section 125 | Deduction for disabled dependents | ₹75,000 / ₹1,25,000 (severe disability) | Old only |
| 80DDB | Medical treatment for specified diseases | Section 127 | Deduction for medical treatment of specified diseases | ₹40,000 / ₹1,00,000 (senior citizens) | Old only |
| 80E | Interest on education loan | Section 128 | Deduction for education loan interest | No upper limit (8 consecutive years) | Old only |
| 80EE / 80EEA | Additional interest on housing loan for first-time buyers | Section 129 | Deduction for housing loan interest (first-time buyers) | As per Section 129 provisions | Old only |
| 80G | Donations to approved funds and institutions | Section 130 | Deduction for donations to approved entities | 50% / 100% of donation (subject to qualifying limits) | Old only |
| 80GG | Rent paid (for non-HRA employees) | Section 131 | Deduction for rent paid where HRA not received | ₹5,000 per month | Old only |
| 80GGA | Donations for scientific research or rural development | Chapter VIII | Deduction for qualifying research donations | 100% of donation | Old only |
| 80GGC | Contributions to political parties | Chapter VIII | Deduction for political party contributions | 100% of contribution | Old only |
| 80TTA | Interest on savings account (non-senior citizens) | Section 134 | Deduction for savings account interest | ₹10,000 | Old only |
| 80TTB | Interest on deposits (senior citizens) | Section 134 | Deduction for deposit interest (senior citizens) | ₹50,000 | Old only |
| 80U | Self-disability deduction | Chapter VIII | Deduction for taxpayer with disability | ₹75,000 / ₹1,25,000 (severe disability) | Old only |
For the complete and definitive section mapping, refer to CBDT circulars published at incometax.gov.in. The table above covers all major deductions; CBDT may issue supplementary notifications for specific provisions.
Missing the regime selection deadline costs you every Chapter VIII deduction for that Tax Year. Salaried employees must inform their employer by April 30 each year to adjust TDS. The final opportunity to opt for the old regime is the return filing due date (July 31 for non-audit cases). For businesses and professionals, switching to the old regime is permitted only once and cannot be reversed annually. Plan your regime choice before April 1, 2026, for Tax Year 2026-27.
New Tax Slabs for Tax Year 2026-27
The new tax regime is the default regime from Tax Year 2026-27. Taxpayers who do not actively opt for the old regime automatically fall under these slabs.
| Taxable Income Slab | Tax Rate (New Regime) |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Add 4% health and education cess on the income tax computed above. Surcharge applies separately for incomes above ₹50,00,000.
Tax Rebate (equivalent of old Section 87A): Under the new regime, the full tax rebate applies if taxable income is up to ₹12,00,000. After the standard deduction of ₹75,000, a salaried employee with gross income up to ₹12,75,000 pays zero income tax. Above ₹12,00,000 taxable income, the rebate does not apply and tax is computed on the full taxable amount at slab rates.
For comparison, the old regime slabs for individual taxpayers below 60 remain unchanged for Tax Year 2026-27: Nil up to ₹2,50,000; 5% from ₹2,50,001 to ₹5,00,000; 20% from ₹5,00,001 to ₹10,00,000; 30% above ₹10,00,000. The old regime rebate (equivalent of old Section 87A) remains at ₹12,500 for taxable income up to ₹5,00,000.
The new regime's expanded nil slab (up to ₹4 lakh) and lower rates in the ₹4 lakh to ₹16 lakh band make it significantly more competitive than the old regime for most taxpayers, especially those without large deductions. The standard deduction of ₹75,000 under the new regime (vs. ₹50,000 under old regime) further tips the balance toward the new regime for salaried individuals.
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File ITR with a ExpertOld Regime vs New Regime: Which Saves More Tax?
The answer depends on your total deductions, not just your income. Let us work through a concrete example and then establish the breakeven framework.
Case Study: Salaried Employee with ₹15,00,000 Gross Income
New Regime:
- Gross income: ₹15,00,000
- Standard deduction: ₹75,000
- Taxable income: ₹14,25,000
- Tax: ₹0 + ₹20,000 (5% on ₹4L) + ₹40,000 (10% on ₹4L) + ₹33,750 (15% on ₹2,25,000) = ₹93,750
- 4% cess: ₹3,750
- Total tax: ₹97,500
Old Regime (with common deductions):
- Gross income: ₹15,00,000
- Standard deduction: ₹50,000
- Section 123 (PPF/ELSS/EPF): ₹1,50,000
- Section 124(3) (NPS additional): ₹50,000
- Section 126 (health insurance): ₹25,000
- Total deductions: ₹2,75,000
- Taxable income: ₹12,25,000
- Tax: ₹0 + ₹12,500 (5% on ₹2.5L) + ₹1,00,000 (20% on ₹5L) + ₹67,500 (30% on ₹2.25L) = ₹1,80,000
- 4% cess: ₹7,200
- Total tax: ₹1,87,200
The new regime saves ₹89,700 for this taxpayer. Even with maximum common deductions, the old regime results in a tax bill nearly double that of the new regime at ₹15 lakh.
When Does the Old Regime Win?
Old regime beats new regime when total deductions are large enough to reduce the tax gap. At ₹15 lakh income, the new regime tax is ₹97,500. To beat this under the old regime, deductions need to reduce taxable income below approximately ₹9,50,000, which requires total deductions of approximately ₹5,50,000 or more.
Taxpayers who can reach this level typically have:
- High HRA in metro cities (rent of ₹30,000+ per month gives HRA deduction of ₹1,80,000 to ₹2,40,000)
- Home loan interest deduction under the old act's Section 24(b) equivalent (up to ₹2,00,000)
- Full Section 123 (₹1,50,000) + Section 124(3) (₹50,000) + Section 126 (₹25,000) = ₹2,25,000
At higher income levels (₹25 lakh and above), the old regime becomes more competitive because the 30% slab difference between regimes narrows, and large deductions produce bigger absolute tax savings. At ₹25 lakh with ₹5,50,000 in deductions, the old regime can match or beat the new regime.
Decision Framework:
- Income up to ₹12,75,000: New regime always wins (zero tax via rebate).
- Income ₹12,75,001 to ₹20,00,000: New regime likely wins unless total deductions exceed ₹4,50,000 to ₹5,50,000.
- Income above ₹20,00,000: Run both calculations; old regime wins when combined deductions (HRA + 80C equivalent + NPS + health insurance + home loan interest) exceed ₹5,50,000 to ₹6,00,000.
Based on our experience filing 10,000+ ITRs, fewer than 18% of salaried employees in the ₹10 lakh to ₹20 lakh income range benefit from the old regime after the new act takes effect. The zero-tax outcome up to ₹12,75,000 and the ₹89,700 saving at ₹15 lakh make the new regime the right choice for most salaried professionals. The old regime remains relevant mainly for taxpayers with metro HRA above ₹2 lakh and those servicing a home loan on a self-occupied property.
Tax Saving Strategy for Salaried Employees Under the New Act
Tax planning under the Income Tax Act, 2025, starts with the regime decision, not with investment selection. Making the wrong regime choice first and investing second costs more than any sub-optimal investment selection.
Step 1: Calculate tax under both regimes before April 1, 2026
Use your projected salary, expected HRA, home loan details, and planned investments to compute tax under both regimes. Most payroll tools will support this calculation from March 2026 onwards. If your employer's tool is not ready, use the CBDT tax calculator at incometax.gov.in or engage a Expert through IncorpX's Income Tax Filing service.
Step 2: If opting old regime, invest to exhaust Section 123 first
If the old regime saves more tax, invest the full ₹1,50,000 in Section 123 instruments that align with your financial goals: EPF (if employer offers VPF top-up), PPF (15-year horizon, tax-free returns), or ELSS (3-year lock-in, equity exposure). Do not invest purely for the tax deduction in instruments that do not match your risk profile or time horizon.
Step 3: Add NPS Section 124(3) for extra ₹50,000 deduction
After exhausting Section 123, contribute ₹50,000 to NPS under Section 124(3). At the 30% slab, this saves ₹15,600 in additional tax. NPS Tier I contributions qualify; Tier II does not. Set up an auto-debit in the first week of April to ensure the contribution happens early in the Tax Year.
Step 4: Claim Section 126 for health insurance
Ensure health insurance for self, family, and parents is in place. The premium for a family floater policy of ₹5 lakh to ₹10 lakh sum insured typically runs ₹12,000 to ₹20,000 per year for a taxpayer below 40, well within the ₹25,000 Section 126 limit. Adding parents (if senior citizens) can push the total deduction to ₹75,000 to ₹1,00,000.
Step 5: Inform employer of regime choice by April 30
Submit a written declaration to your employer before April 30, 2026, if you opt for the old regime. Your Form 16 and monthly TDS deductions will reflect the deductions accordingly. Without this declaration, your employer defaults to the new regime and deducts TDS without Chapter VIII deductions. You can claim the deductions at return filing, but you may face a refund scenario rather than reduced monthly TDS outgo.
Optimal Investment Mix for 30% Slab Taxpayer Choosing Old Regime:
- Section 123: ₹1,50,000 (EPF contribution counts automatically; add VPF or ELSS to reach the limit)
- Section 124(3) NPS: ₹50,000
- Section 126 health insurance: ₹25,000 (₹50,000 if senior citizen)
- Home loan interest (old Section 24(b) equivalent): Up to ₹2,00,000 if applicable
- Total deductions achievable: ₹3,75,000 to ₹5,75,000 (depending on home loan and HRA)
- Tax saving vs new regime: ₹89,700 at ₹15 lakh income (or more with higher deductions)
For salaried employees in the ₹12,75,001 to ₹15,00,000 range, the new regime is almost always better even with modest deductions. Confirm the numbers for your specific income and deduction profile before committing to the old regime.
Common Mistakes to Avoid in Tax Planning Under the New Act
The transition from the Income Tax Act, 1961, to the Income Tax Act, 2025, creates specific pitfalls. These are the errors that result in incorrect returns, missed deductions, or regime regrets.
Mistake 1: Quoting old section numbers in investment proofs and declarations
From Tax Year 2026-27, Form 16, ITR forms, and CBDT notices use new section numbers. If your declaration to your employer says "80C deduction" instead of "Section 123 deduction," it may create a mismatch in payroll processing. Update your investment declarations with the correct Chapter VIII section numbers. More importantly, verify that your employer's payroll software updates the section references before April 2026; many legacy payroll systems update late.
Mistake 2: Assuming Chapter VIII deductions work under the new regime
The new regime is the default. Taxpayers who do not actively opt for the old regime cannot claim Section 123, Section 124(3), Section 126, or any other Chapter VIII deduction (except employer NPS under Section 124(2)). Several taxpayers invest ₹1,50,000 in ELSS and ₹50,000 in NPS in April, expecting the deduction at filing, and then discover they were on the new regime all year with no option to retroactively claim those deductions. Make the regime choice before investing, not after.
Mistake 3: Missing the July 31 regime switch deadline
The return filing due date is the last opportunity to switch between regimes. Many taxpayers miss this while waiting for Form 16 to arrive. Form 16 typically comes by June 15. Use the period June 15 to July 31 to verify your regime, run the final tax calculation, and file. Do not wait until the last week of July; the income tax portal experiences heavy traffic and technical issues in late July every year.
Mistake 4: Investing in too many Section 123 instruments
The ₹1,50,000 Section 123 ceiling catches many taxpayers off guard. An employee with a basic salary of ₹60,000 per month contributes ₹43,200 per year to EPF (12% of ₹30,000 basic), leaving ₹1,06,800 remaining for other Section 123 investments. Investing an additional ₹1,50,000 in PPF on top of EPF does not give extra deduction beyond ₹1,50,000. Track total Section 123 investments from the start of the Tax Year.
Mistake 5: Claiming Section 126 on cash premium payments
Section 126 (old Section 80D) disallows deductions for health insurance premiums paid in cash. Only the preventive health check-up sub-limit of ₹5,000 permits cash payment. Taxpayers who pay annual premiums in cash to agents lose the entire Section 126 deduction for that premium. Pay premiums by cheque, bank transfer, UPI, or credit card to preserve the deduction eligibility.
Mistake 6: Ignoring Section 134 savings interest deduction
Section 134 (old Sections 80TTA and 80TTB) provides a deduction of ₹10,000 on savings bank interest for taxpayers below 60, and ₹50,000 for senior citizens on all deposit interest including FD interest. Many taxpayers forget to claim this deduction, especially when the interest amount is small. At the 20% slab, a ₹10,000 deduction saves ₹2,080. Small amounts add up over a career.
Summary: Tax Savings Under the New Income Tax Act, 2025
The Income Tax Act, 2025, preserves every major tax-saving deduction at the same limits but renumbers them under Chapter VIII. Section 80C becomes Section 123, Section 80D becomes Section 126, and Section 80CCD(1B) becomes Section 124(3). The deduction limits for Tax Year 2026-27 are identical to those of Tax Year 2025-26. The critical decision is the regime choice: the new default regime offers zero tax up to ₹12,75,000 gross for salaried employees, making it the right choice for most taxpayers in that income range, while the old regime rewards those with total deductions exceeding ₹4,50,000 to ₹5,50,000 at higher income levels.
File your return with the correct regime and accurate Chapter VIII deductions by July 31, 2027, to complete your Tax Year 2026-27 compliance. If you are not certain which regime reduces your tax, a Expert review of your Form 16 and investment proofs will give you a definitive answer before filing.
File Your Tax Year 2026-27 ITR Correctly
IncorpX tax experts review your Form 16, map all Chapter VIII deductions to correct new section numbers, choose the best regime for your income, and file your ITR. Plans start at ₹499 for salaried individuals.
Start ITR FilingFor a detailed comparison of structural changes between the two acts, read our blog on Income Tax Act 2025 vs 1961: Section Mapping. For an overview of all key changes, visit our guide on the New Income Tax Act 2025 Transition Guide. Business owners choosing between regimes will find our analysis on Old vs New Tax Regime 2026 for Business Owners directly applicable. For TDS-related queries, see our detailed guide on TDS Return Filing.
The new act also introduces updated return filing procedures under Section 263 (old Section 139). Filing deadlines remain July 31 for non-audit individuals and October 31 for audit cases. The shift to Tax Year terminology does not alter the return filing calendar; returns for Tax Year 2026-27 are due by July 31, 2027, the same schedule taxpayers followed for Assessment Year 2026-27 under the old act. Staying current with CBDT notifications through the official portal ensures you catch any further updates to Chapter VIII deduction conditions or Schedule XV changes before filing.
