With the new tax regime (NTR) becoming the default regime lately, several taxpayers are anxious about having lost the eligibility to claim deduction. What, however, is not known to many people is that some deductions and exemptions are still allowed in the new tax regime.
Although the typical deductions for investment in the tax-saving instruments such as PPF, ELSS, KVP and NSC, have been phased out; taxpayers can still claim the following deductions.
New tax regime: These deductions are still allowed
1.Standard deduction: Standard deduction amounting to ₹50,000 or the amount of salary, whichever is lower, is available for both old and new tax regimes from AY 2024-25 onwards, mentions Income Tax portal.
2.Deduction under 80CCD (2): This section deals with the income tax (I-T) deductions on contributions made by the employer to the employee’s pension account i.e., NPS. The maximum deduction allowed under this is ₹2 lakh.
3.Deduction under 80CCH: This section provides for a tax deduction on contributions made to the Agniveer Corpus Fund.
4.Deduction under 80JJAA: Section 80JJAA of the Income Tax Act allows eligible business entities to claim a deduction for bringing new employees on board.
A deduction of 30 percent of the additional employee costs can be availed for three consecutive assessment years, starting from the year the new employees are hired.
5.Exemption for senior citizens: In the old tax regime, the basic exemption limit for senior citizens was ₹3 lakh and for super senior citizens, it was ₹5 lakh.
In the new tax regime, no income tax is payable up to the total income of ₹7 lakh.
HRA not allowed
Meanwhile, it is vital to note that the House Rent Allowance (HRA) which is exempted under section 10(13A) for salaried individuals is not available in the new tax regime.
