Can I Claim 80C, 80D, and 87A Together? Maximize your tax savings for FY 2025-26

Taxpayers in India have the opportunity to save significantly on their taxes by claiming deductions and rebates under various sections of the Income Tax Act. Among these, Sections 80C and 80D offer substantial deductions for investments and health insurance premiums, respectively. Additionally, Section 87A provides a rebate for individuals whose taxable income falls below a specified threshold. The core question many taxpayers ask is whether they can claim deductions under 80C and 80D together and still be eligible for the Section 87A rebate. The answer is yes, individuals can claim deductions under both Section 80C and 80D together, and in certain circumstances, they can also benefit from the tax rebate under Section 87A, provided they meet specific eligibility criteria. This combination of benefits can help reduce taxable income and lower overall tax liabilities.

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Table of Contents

1. Can I claim 80C, 80D, and 87A together?

2. Is Section 87A Available After Claiming 80C and 80D?

3. How Section 80C Works: Overview of Tax Benefits

4. How Section 80D Works: Health Insurance Tax Benefits

5. Is Section 87A Available in the New Tax Regime?

6. How Section 87A Works in the Old Tax Regime

7. Practical Example: Claiming 80C, 80D, and 87A Together

8. Important Conditions to Note

9. Summary Table

10. Conclusion

11. Most Asked Questions

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Can I claim 80C, 80D, and 87A together?

Yes, taxpayers can claim deductions under Sections 80C and 80D simultaneously, which means that you can reduce your taxable income by up to Rs 1.5 lakh under 80C for eligible investments, and an additional amount (up to Rs 50,000 or more, depending on age and health insurance policy) under 80D for health insurance premiums. These deductions are separate and do not overlap, allowing you to maximize your tax savings.

In addition to these deductions, individuals who meet the income criteria can also claim a rebate under Section 87A. This rebate is applicable to individuals whose total taxable income falls below the prescribed threshold after claiming deductions under Sections 80C and 80D. For the financial year 2025-26, the income threshold under the new tax regime is Rs 12 lakh, while it remains Rs 5 lakh under the old regime. Thus, if your income after deductions is below the threshold, you could qualify for a tax rebate under Section 87A, further reducing your overall tax liability.

Is Section 87A Available After Claiming 80C and 80D?

Yes, Section 87A can be claimed after you have claimed deductions under Sections 80C and 80D, but there are specific conditions to meet. Section 87A provides a tax rebate for individuals whose total taxable income, after claiming deductions, does not exceed a certain threshold.

• Under the New Tax Regime (FY 2025-26), the rebate under Section 87A is available for taxable income up to Rs 12 lakh. This means that if your taxable income, after claiming deductions like 80C and 80D, is below Rs 12 lakh, you are eligible for the rebate.

  
  

• Under the Old Tax Regime, the rebate is available for taxable income up to Rs 5 lakh. If your total income after deductions is below this limit, you qualify for a rebate of up to Rs 25,000 (or Rs 12,500 for individuals below 60 years).

The rebate is calculated on the tax payable and not on the income. This means that if your tax liability, after applying all deductions, is below the rebate limit, you can reduce it to zero using Section 87A. However, keep in mind that the rebate cannot be claimed on taxes related to long-term capital gains under Section 112A.

How Section 80C Works: Overview of Tax Benefits

Section 80C is one of the most widely used sections for claiming tax deductions. It offers a wide array of investment options that can help reduce your taxable income. The maximum deduction available under Section 80C is Rs 1.5 lakh per financial year, and this limit is applicable to the total combined value of all eligible investments and expenses.

Eligible Investments and Expenses Under Section 80C Include:

• Public Provident Fund (PPF): Contributions to a PPF account qualify for deductions under this section.

  
  

• Employee Provident Fund (EPF): Employee contributions to EPF are also eligible.

  
  

• National Savings Certificate (NSC): Contributions made to NSC can be claimed.

  
  

• Life Insurance Premiums: Premiums paid for life insurance policies (for self, spouse, and children) are eligible.

  
  

• Tax-Saving Fixed Deposits: Investments in tax-saving fixed deposits with a lock-in period of 5 years qualify.

  
  

• Children's Tuition Fees: Tuition fees paid for the education of children are eligible for deduction.

  
  

• Home Loan Principal Repayment: The principal repayment of home loans is also eligible for deduction under 80C.All these investments, along with others mentioned under Section 80C, can be combined to claim up to the Rs 1.5 lakh limit, thereby reducing your overall taxable income.

How Section 80D Works: Health Insurance Tax Benefits

Section 80D offers tax deductions for premiums paid on health insurance policies, helping individuals and families reduce their taxable income while securing their health. This deduction is separate from Section 80C, which allows deductions on investments.

Eligible Premiums Under Section 80D:

• Health Insurance for Self and Family: Premiums paid for health insurance policies for yourself, your spouse, and children are eligible for deduction. The maximum deduction available for this is Rs 25,000 for individuals below 60 years.

  
  

• Health Insurance for Parents: If you are paying premiums for the health insurance of your parents, you can claim an additional deduction of Rs 25,000 for parents below 60 years.

  
  

• For Senior Citizens: The deduction increases to Rs 50,000 if the insured individual is above 60 years of age (for both self and parents).

It's important to note that the deduction for 80D is independent of the 80C limit, so you can claim both deductions together. The amount you can claim depends on the premiums paid and the age of the insured persons.

This deduction helps reduce your taxable income while promoting health insurance coverage, which is crucial in today’s times.

Is Section 87A Available in the New Tax Regime?

Section 87A offers a tax rebate for resident individuals whose total taxable income, after applying eligible deductions, falls under a specific threshold. Under the new tax regime for FY 2025-26 (Assessment Year 2026-27), the income limit to qualify for this rebate has been increased to Rs 12 lakh. This means that taxpayers whose total income after deductions is below Rs 12 lakh can benefit from a rebate of up to Rs 25,000, which reduces their overall tax liability.

The rebate is applied to the income tax before applying any cess or surcharge. Importantly, senior citizens (aged 60 to 80 years) continue to be eligible for this rebate. However, the new tax regime does not allow for the same set of deductions and exemptions as the old regime, including deductions under Sections 80C and 80D, making it crucial for taxpayers to assess their eligibility based on their income and filing preferences.

How Section 87A Works in the Old Tax Regime

Under the old tax regime, Section 87A provides a rebate for resident individuals with a taxable income of up to Rs 5 lakh. For FY 2025-26 (Assessment Year 2026-27), the rebate is capped at Rs 12,500. This means that if your total taxable income after claiming deductions under Section 80C, 80D, and other eligible sections falls below Rs 5 lakh, you can receive a full rebate, effectively making your income tax liability zero.

Taxpayers need to ensure that their taxable income falls within the prescribed limit after claiming deductions. For example, claiming deductions under Section 80C for investments such as PPF and ELSS or under Section 80D for health insurance premiums can significantly reduce your taxable income, bringing it below the Rs 5 lakh threshold, which is essential for qualifying for the Section 87A rebate.

Practical Example: Claiming 80C, 80D, and 87A Together

Let’s take the example of Mr. Virat, who is a resident individual with a total income of Rs 5.75 lakh. Here’s how he can claim the benefits under Sections 80C, 80D, and 87A:

• Step 1: Claiming Section 80C Deduction Mr. Virat invests Rs 1.5 lakh in eligible instruments such as PPF, ELSS, and life insurance premiums, thereby claiming the maximum deduction under Section 80C.

  
  

• Step 2: Claiming Section 80D Deduction He also pays Rs 25,000 as premiums for a health insurance policy for himself. Therefore, he claims Rs 25,000 under Section 80D.

  
  

• Step 3: Calculating Taxable Income After these deductions, Mr. Virat’s taxable income is reduced from Rs 5.75 lakh to Rs 4 lakh (Rs 5.75 lakh - Rs 1.5 lakh - Rs 25,000).

  
  

• Step 4: Claiming Section 87A Rebate Since Mr. Virat’s taxable income is below Rs 5 lakh under the old tax regime, he qualifies for the Section 87A rebate of Rs 12,500, which effectively reduces his tax liability to zero.

Thus, by claiming deductions under 80C and 80D, Mr. Virat is eligible for the rebate under Section 87A, which makes his overall tax liability null, providing a significant tax-saving benefit.

Important Conditions to Note

To successfully claim deductions under Sections 80C and 80D together and also apply the rebate under Section 87A, there are a few key conditions to remember:

1. Residency Status

   • Only resident individuals are eligible for the Section 87A rebate.

   • Non-resident individuals cannot claim this rebate.

     
     

2. Income Limits for Section 87A

   • Under the old tax regime, the rebate can only be claimed if the total taxable income after deductions is below Rs 5 lakh.

   • Under the new tax regime, the income limit is Rs 12 lakh.

     
     

3. Rebate Application

   • The rebate under Section 87A is applied to the income tax payable before applying any cess or surcharge.

     
     

4. Capital Gains Exclusion

   • The rebate under Section 87A cannot be claimed on tax payable on long-term capital gains from equity shares or equity-oriented mutual funds under Section 112A.

     
     

5. Deductions under 80C and 80D

   • You can claim both Section 80C and Section 80D deductions together. However, these deductions must be accounted for separately before claiming the rebate.

Summary Table

Section	What it Covers	Max Deduction/Rebate	Can be Claimed Together?
80C	Investments like PPF, ELSS, life insurance, tuition fees	Rs 1.5 lakh	Yes
80D	Health insurance premiums for self, family, parents	Up to Rs 50,000	Yes
87A	Tax rebate for resident individuals with taxable income below threshold	Rs 12,500 (old regime) / Rs 25,000 (new regime)	Yes, after deductions under 80C, 80D

Conclusion

Claiming deductions under Sections 80C and 80D together can significantly reduce your taxable income, and when combined with the Section 87A rebate, you can achieve substantial tax savings. It is crucial to understand the eligibility criteria for both the old and new tax regimes and calculate your total taxable income carefully to maximize these benefits. Filing your Income Tax Return correctly and ensuring you meet the necessary conditions will allow you to take full advantage of these deductions and rebates.

FAQs

1. Can I claim Section 80C deductions along with Section 80D?

   Yes, you can claim deductions under both Section 80C and Section 80D simultaneously. Section 80C allows for deductions up to Rs 1.5 lakh for eligible investments like PPF, life insurance premiums, and tuition fees. Section 80D provides additional deductions for premiums paid on health insurance policies, and these are separate from 80C limits.

   
   

2. What is the maximum amount I can claim under Section 80C in a financial year?

   The maximum amount you can claim under Section 80C is Rs 1.5 lakh per financial year. This limit covers a variety of investments and expenses such as PPF, life insurance premiums, and principal repayments on home loans.

   
   

3. Can I claim both life insurance and PPF under Section 80C?

   Yes, you can claim both life insurance premiums and PPF contributions under Section 80C, as long as the total deductions for the year do not exceed the Rs 1.5 lakh limit.

   
   

4. How does Section 80D provide tax relief for health insurance premiums?

   Section 80D offers tax deductions for premiums paid on health insurance policies for yourself, your spouse, children, and parents. The deduction limit is up to Rs 25,000 (Rs 50,000 for senior citizens) for self and family, and up to Rs 50,000 for parents (Rs 1 lakh for senior citizen parents).

   
   

5. What are the income limits for claiming Section 87A rebate?

   To claim the Section 87A rebate, your total taxable income must be below a specific threshold. Under the old tax regime, the limit is Rs 5 lakh. Under the new tax regime, the limit has been increased to Rs 12 lakh for FY 2025-26.

   
   

6. Can I claim the Section 87A rebate under the new tax regime?

   Yes, you can claim the Section 87A rebate under the new tax regime if your taxable income after deductions is below Rs 12 lakh. The rebate amount will be the lower of Rs 25,000 or the tax payable.

   
   

7. How does Section 87A work under the old tax regime?

   Under the old tax regime, you can claim the Section 87A rebate if your taxable income is below Rs 5 lakh. The rebate is Rs 12,500 or the tax payable, whichever is lower. This rebate is applied before cess and surcharge.

   
   

8. Can I claim a rebate under Section 87A if I have long-term capital gains?

   No, Section 87A rebate cannot be claimed on tax payable from long-term capital gains, specifically those under Section 112A related to equity shares and equity-oriented mutual funds.

   
   

9. What is the difference between the old and new tax regimes for claiming 87A?

   The primary difference is the income threshold for eligibility. Under the old tax regime, the threshold is Rs 5 lakh, while under the new tax regime, it is Rs 12 lakh. The rebate amount also varies: Rs 12,500 under the old regime and Rs 25,000 under the new regime.

   
   

10. How can I maximize tax savings using 80C, 80D, and 87A?

    To maximize tax savings, you should claim the full Rs 1.5 lakh limit under Section 80C by investing in options like PPF, ELSS, and life insurance. Additionally, use Section 80D to claim deductions for health insurance premiums, especially for senior citizens. Finally, ensure that your taxable income after claiming these deductions is below the threshold for Section 87A to avail the rebate.

    
    

11. Are there any age-related restrictions for claiming 80D deductions?

    Yes, the age of the insured person affects the deduction limit under Section 80D. For self and family, the deduction is up to Rs 25,000, but if the insured person is a senior citizen (60 years or older), the limit increases to Rs 50,000. Similarly, for parents, the limit is Rs 25,000, and it rises to Rs 50,000 if the parents are senior citizens.

    
    

12. Can senior citizens claim the 87A rebate under the new tax regime?

Yes, senior citizens can claim the Section 87A rebate under the new tax regime if their taxable income is below Rs 12 lakh. The rebate amount is the lesser of the tax payable or Rs 25,000. However, the rebate is not available for super senior citizens (those above 80 years) under the new tax regime.