Introduction
This FAQ on tax saving investments for FY 2025–26 (AY 2026–27) addresses the most common questions related to deductions, limits, and eligible options available under the Income Tax Act.
Tax-saving investments continue to play a crucial role in financial planning, particularly under the old tax regime, where deductions directly reduce taxable income. Popular provisions such as Section 80C, Section 80D, and Section 80CCD allow taxpayers to claim benefits for eligible investments and expenses.
However, with the introduction of the new tax regime, which offers concessional tax rates but restricts most deductions, the relevance of tax-saving investments has become conditional rather than universal. Taxpayers must now evaluate whether investing for tax saving actually leads to a lower tax liability or whether opting for the new regime without deductions is more beneficial.
👉 Accordingly, this FAQ section provides clear and concise answers to help taxpayers understand the applicability, limits, and practical aspects of tax saving investments for FY 2025–26.
Most Frequently Asked Questions (FAQ)
What are the best tax-saving investment options for FY 2025–26?
The most commonly used options under Section 80C (maximum ₹1.5 lakh deduction) include:
ELSS (Equity Linked Saving Scheme)
Public Provident Fund (PPF)
National Pension Scheme (NPS)
Tax-saving Fixed Deposits (5-year lock-in)
Life Insurance Premiums
National Savings Certificate (NSC)
Sukanya Samriddhi Yojana
Home loan principal repayment and tuition fees
What is the maximum deduction allowed under Section 80C?
A maximum deduction of ₹1,50,000 per financial year can be claimed under Section 80C.
Can I claim both Section 80C and Section 80D deductions?
Yes. Both deductions are available:
Section 80C: Up to ₹1.5 lakh
Section 80D: ₹25,000 to ₹1,00,000 depending on age and coverage
Preventive health check-ups and medical expenses for senior citizens are also allowed within limits.
Is NPS a good tax-saving investment?
Yes. NPS provides:
Deduction under Section 80CCD(1) (within ₹1.5 lakh limit)
Additional ₹50,000 deduction under Section 80CCD(1B)
It also supports long-term retirement planning.
Is ELSS better than PPF or tax-saving FD?
ELSS: 3-year lock-in, market-linked, higher return potential (with risk)
PPF / FD: Fixed returns, longer lock-in (15 years / 5 years)
The choice depends on risk appetite and investment horizon.
Can I claim deduction for investments made in spouse or child’s name?
Yes. Investments made in the name of spouse or minor child can be claimed under your Section 80C limit (₹1.5 lakh).
What tax-saving options are available under the new tax regime?
Under the new tax regime:
Most deductions (80C, 80D, HRA) are not allowed
Employer contribution to NPS under Section 80CCD(2) is allowed
Standard deduction of ₹75,000 is available
What is the last date to make tax-saving investments for FY 2025–26?
The last date is 31st March 2026 to claim deductions for AY 2026–27.
Final Note
Tax-saving investments should not be viewed as standalone decisions but as part of a broader tax planning strategy. While these instruments help reduce taxable income under the old tax regime, their effectiveness depends on the total deductions available and the taxpayer’s overall income structure.
With the availability of the new tax regime, where most deductions are not allowed, taxpayers must carefully evaluate whether investing for tax saving actually results in a lower tax outflow. In many cases, the benefit of deductions must be weighed against the concessional slab rates offered under the new regime.
👉 Therefore, before making any tax-saving investment, it is advisable to assess eligibility, deduction limits, lock-in periods, and overall financial goals.
👉 In practice, the most suitable approach is to choose the option that results in the lowest effective tax liability while aligning with long-term financial planning objectives.
Related Articles
For a deeper understanding of the old vs new tax regime AY 2026–27, refer to the following practical guides:
Disclaimer
This article is for general information and does not constitute professional advice. Tax rules change via Finance Acts, CBDT notifications, and judicial decisions. Verify the latest provisions or consult a qualified professional for your specific case. TaxBizMantra is not responsible for decisions made solely on this content.
