As per the present tax laws, taxpayers have the option to choose between the old tax regime, which allows various deductions and exemptions, and the new regime, which offers lower tax rates but fewer deductions.
Because of these limitations, taxpayers should evaluate which income tax regime benefits them more based on their income and expenses.
Here are the income tax deductions you can claim under the new tax regime. At the end, we have listed deductions that an individual is not allowed to claim if opted for the new tax regime.
Standard deduction for salaried individuals
For the financial year 2023-24 (assessment year 2024-25) in India, the standard deduction for salaried individuals is Rs 50,000.
Standard deduction applies to income from salary and helps reduce the taxable income for individuals.
For the financial year 2024-25, under the new tax regime, salaried individuals can claim a standard deduction of up to Rs 75,000. Which means, standard deduction under the old tax regime is still Rs 50,000.
Also Read: Income tax slabs FY 2024-25 (AY 2025-26) – New & Old Regime Tax Rates
Standard deduction on family pension
In India, a family pension is the pension received by the family members of a deceased employee or pensioner. Family pensions are taxable under the heading “Income from Other Sources”.
For the financial year 2024-25 (assessment year 2025-26), in India, the standard deduction for family pension under the old tax regime is Rs 15,000 or one-third of the family pension received, whichever is lower.
Now, if you opt for the new tax regime, for the financial year 2024-25 (AY 2025-26), and receive family pension, you can avail higher standard deduction. It’s either Rs 25,000 or one-third of your pension, whichever is lower.
Interest on home loan for Let-Out property (Section 24)
When it comes to income tax and house property, you can claim a tax deduction on the interest paid on a home loan.
Unlike the old regime, you can’t claim deductions for home loan interest that you have occupied under the new tax regime.
If you have a home loan for a property that you’ve rented out, the interest paid on that loan is tax deductible under Section 24. There is no upper limit on such deductions.
Gifts up to Rs 50,000
Tax treatment of gifts under the new tax regime in India is generally the same as in the old regime.
Gifts received from relatives are exempt from tax.
Gifts received from non-relatives are exempted from tax up to Rs 50,000. Gift exceeding Rs 50,000 is taxable under the head income from other sources. However if it’s received during marriage, then it’s exempted.
Employer’s contribution to NPS
Most tax deductions available under the old regime (like those under Sections 80C, 80D, etc.) are not available in the new regime.
However, the contribution made by your employer to your National Pension System (NPS) account is eligible for deduction under the new tax regime.
In addition to above, you may also be eligible for following tax deductions if opted for new tax regime:
- Additional employee costs under section 80JJA.
- Amount paid or deposited in the Agniveer Corpus Fund is eligible for deduction.
- Transport allowance, conveyance, and daily allowance for specially-abled persons related to employment.
However, there are certain exemptions and deductions that you cannot claim under the new tax regime. These include:
- Interest on Savings Account under Section 80TTA / 80TTB
- Professional Tax and Entertainment Allowance on Salaries
- Leave Travel Allowance (LTA)
- House Rent Allowance (HRA)
- Allowances to MPs/MLAs
- Minor Child Income Allowance
- Helper Allowance
- Children Education Allowance
- Other Special Allowances under section 10(14)
- Additional Depreciation under section 32(1)(iia)
- Various Deductions for Scientific Research under section 35
- Interest on Housing Loan for Self-Occupied or Vacant Property under Section 24
- Chapter VI-A Deductions (except Section 80CCD(2) and Section 80JJAA)
- Exemption or Deduction for other perquisites or allowances
Also Read: How to prepare for income tax return filing FY 2024-25 (AY 2025-26)
