(INDIA) — Indian taxpayers are recalculating where tax breaks still survive under the new tax regime in 2026, with products such as PPF and Sukanya Samriddhi still offering exempt interest or maturity proceeds even as many older deduction-based strategies lose force.

The shift has changed the tax question. The issue is no longer limited to whether an investment qualifies for a deduction at the time of contribution. It now turns on whether interest, maturity proceeds, pension withdrawals, or capital gains stay exempt under statutory conditions.

That distinction leaves a narrower group of products with clear advantages. PPF and Sukanya Samriddhi remain among the cleanest options, while National Pension System, Employee Provident Fund, Voluntary Provident Fund, insurance products, section 54EC bonds, and Sovereign Gold Bonds work only within tighter rules.

The Shift in Tax Planning: Beyond Section 80C

Many taxpayers still link tax planning to section 80C, which historically covered products such as PPF contributions, life insurance premiums, ELSS investments, tuition fees, and housing loan principal repayment. Under the new regime, those deductions generally do not operate in the same manner.

Some benefits, however, continue at a different stage. Interest can remain exempt. Maturity proceeds can remain exempt. Capital gains can still be reduced or avoided if sale proceeds move into a specified bond or residential property within the statutory framework.

That matters beyond salaried residents. Non-resident Indians, returning Indians, overseas workers, foreign citizens in Indian-origin families, and people selling property in India still face decisions on tax residence, reinvestment, TDS, and asset reporting.

Public Provident Fund (PPF): Simplicity and Exemption

Public Provident Fund remains one of the clearest examples of that split between deduction and exemption. A contribution may no longer deliver the same deduction benefit under the new regime, but the account still offers exempt interest and exempt maturity proceeds under the scheme rules.

Its attraction rests on simplicity. PPF remains government-backed, disciplined, and built for long-term accumulation, with an annual contribution limit of ₹1,50,000.

That does not mean the scheme is open to all savers on the same terms. NRIs cannot open fresh PPF accounts under the scheme rules, and existing accounts follow separate continuation rules depending on account status and applicable notifications.

Sukanya Samriddhi Yojana: For a Girl Child

Sukanya Samriddhi Yojana, also known as Sukanya Samriddhi, occupies a similar place for families saving for a girl child. The scheme generally applies where the account is opened before the girl child reaches 10 years of age, and the interest and maturity proceeds are generally exempt if the scheme conditions are met.

Its tax profile remains intact even when the contribution deduction is less useful under the new regime. The annual contribution limit is also ₹1,50,000.

Families living overseas need to watch eligibility and operating rules more closely, especially where the child or parent becomes non-resident. The benefit can remain attractive, but account status and scheme conditions matter.

National Pension System (NPS): Tied to Employer Contribution

National Pension System stands on different ground. It is not a fully tax-free product, and its benefit under the new regime sits largely in the employer contribution rather than the employee’s own contribution.

Employer contribution under section 80CCD(2) remains available within the prescribed limit even under the new regime. That keeps NPS relevant for salaried employees whose employers route part of compensation into the pension system instead of paying the full amount as taxable salary.

The exemption is not open-ended. Employer contribution to NPS, recognised provident fund, and approved superannuation fund falls under a combined annual cap, and excess amounts can become taxable as a perquisite.

Exit taxation also narrows the benefit. Only the specified portion of NPS withdrawal is exempt, while pension received from the annuity remains taxable as regular income.

Employee Provident Fund (EPF) and Voluntary Provident Fund (VPF)

Employee Provident Fund remains a core retirement holding for salaried workers, but its tax treatment also depends on conditions. The employee may not get the same section 80C relief on contributions under the new regime, yet the accumulated balance can remain exempt on retirement or withdrawal after a continuous service period that is generally five years.

Withdrawals before that point can trigger tax consequences unless they fall within permitted exceptions. Employer contribution also continues to receive favourable treatment, subject to the same combined cap that applies across EPF, NPS, and superannuation fund.

Higher earners face another limit. Interest on employee contributions above the prescribed threshold can become taxable, which affects workers making large provident fund contributions.

Voluntary Provident Fund carries the same warning because it sits inside the same provident fund system. VPF is an additional voluntary contribution by the employee, usually chosen by savers who want the EPF rate and a stricter savings discipline.

Its tax treatment does not stand apart from EPF. Regular EPF and VPF contributions are counted together when the taxable-interest threshold applies, so a large combined contribution can leave part of the interest taxable.

Unit Linked Insurance Plans (ULIPs) and Traditional Insurance

Unit Linked Insurance Plans have also become harder to classify as tax-free products. For ULIPs issued on or after 1 February 2021, the maturity exemption may be denied if the premium payable crosses the prescribed annual threshold.

Tax law also looks at the total position where a taxpayer holds multiple ULIPs. If the premium limit is breached, maturity proceeds may be taxed as capital gains instead of being treated as exempt insurance proceeds.

Death benefit generally remains exempt, subject to the applicable law. That leaves policy issue date, premium amount, sum assured, aggregate premium, and maturity conditions at the centre of any tax analysis.

Traditional life insurance policies also no longer justify a blanket assumption of exempt maturity. Endowment and money-back plans can still qualify, but the outcome depends on when the policy was issued and how the premium compares with the actual sum assured.

For policies issued on or after 1 April 2012, the common premium limit is 10% of the actual sum assured. A separate premium-based restriction also applies to certain non-ULIP life insurance policies issued on or after 1 April 2023, where aggregate annual premium above the prescribed limit can make maturity proceeds taxable.

Capital Gains Products: 54EC Bonds and Property Reinvestment

Capital gains products sit in a separate bucket altogether. Section 54EC bonds do not offer tax-free interest, but they can shelter capital gains when a taxpayer sells long-term land or building and reinvests within six months from the date of transfer.

The maximum investment eligible for that exemption is ₹50,00,000, and the bonds carry a lock-in period that is generally five years. Their value lies in the exemption on the reinvested capital gain, not in the coupon, because the interest earned on those bonds remains taxable.

That makes 54EC a practical route for some NRIs selling Indian property who do not want to buy another house. Timing is tight, and the decision interacts with TDS, capital gains computation, repatriation, and documentation.

Sections 54 and 54F address a different choice. Section 54 generally covers the sale of a long-term residential house followed by reinvestment of the capital gain in another residential house in India, while section 54F generally applies where an individual or HUF sells a long-term capital asset other than a residential house and invests the net sale consideration in a residential house.

Those provisions are not standard savings products, but they remain part of tax planning under the new regime because they work as capital gains exemptions rather than salary-linked deductions. A taxpayer choosing between another property and 54EC bonds is making a reinvestment decision, not a section 80C decision.

Sovereign Gold Bonds (SGBs): Partial Relief

Sovereign Gold Bonds follow the same pattern of partial relief rather than blanket exemption. For individual investors, redemption of Sovereign Gold Bonds issued by the Reserve Bank of India enjoys favourable capital gains treatment because gains on redemption are not treated as a taxable transfer under the specified provision.

The interest does not receive that treatment. Interest on Sovereign Gold Bonds remains taxable, which makes them tax-efficient rather than fully tax-free.

Three Broad Groups of Tax-Efficient Products

Read together, the products fall into three broad groups. PPF and Sukanya Samriddhi offer relatively clean tax-free accumulation under their scheme rules. NPS, EPF, and VPF remain useful retirement products but carry contribution caps, withdrawal conditions, and taxable components. ULIPs, traditional insurance, 54EC bonds, property reinvestment under sections 54 and 54F, and Sovereign Gold Bonds depend on issue date, premium limits, holding period, sale proceeds, or reinvestment timing.

The Practical Takeaway: Focus on Exemption, Not Deduction

The practical divide is between deduction, exemption, and reinvestment relief. A taxpayer who dismisses an investment because it no longer delivers a deduction under the new regime can still miss an exempt maturity amount, an employer-linked pension benefit, or a capital gains shelter that remains available in 2026.

That is especially true for Indians with assets or income spread across borders. A person living overseas may still hold provident fund balances, insurance policies, inherited property, land, houses, or bank accounts in India, and each of those holdings can trigger a different tax result when sold, matured, or withdrawn.

The new regime has reduced deduction-based tax planning. It has not erased tax-efficient investing. It has shifted the focus to the stage at which tax applies, the statutory cap that applies, and the condition that keeps an exemption alive.