Many taxpayers assume that choosing the new tax regime means saying goodbye to deductions and exemptions altogether. But that is not entirely true. While the list is much shorter than under the old regime, it does not leave taxpayers entirely empty-handed. In fact, a handful of deductions and exemptions are still available and can help reduce your tax burden if you know where to look.
If you have opted for the new tax regime or are planning to switch, here are five important tax benefits that you can still claim.
STANDARD DEDUCTION FOR SALARIED EMPLOYEES
The most widely used benefit under the new tax regime is the standard deduction.
Salaried employees can claim a standard deduction of Rs 75,000 from their income. This amount is deducted directly from taxable salary, helping lower the overall tax liability without requiring any investment or paperwork.
For most salaried taxpayers, this remains one of the biggest tax benefits available under the new regime.
HOME LOAN INTEREST ON LET-OUT PROPERTY
Homeowners who have taken a loan for a rented-out property can continue to claim a deduction on the interest paid on the home loan under Section 24(b).
There is no upper limit on the amount of interest that can be claimed as a deduction against rental income.
However, taxpayers should note that any loss arising under the head “Income from House Property” cannot be adjusted against income from other sources or carried forward to future years under the new tax regime.
EMPLOYER’S CONTRIBUTION TO NPS
The new tax regime also allows a deduction for contributions made by an employer to an employee’s National Pension System (NPS) account under Section 80CCD(2).
Employees can claim a deduction of up to 14% of their salary for the employer’s contribution. This benefit is available regardless of whether the employer is from the government or private sector.
For those whose companies offer NPS contributions as part of their compensation package, this can provide a meaningful tax advantage.
DEDUCTION ON FAMILY PENSION
Individuals receiving a family pension are also eligible for tax relief under the new tax regime.
They can claim a deduction of Rs 25,000 or one-third of the pension received, whichever is lower.
This provision helps reduce the taxable income of family pension recipients and remains available even after shifting to the new tax structure.
EXEMPTIONS ON RETIREMENT BENEFITS
Several retirement-related exemptions have been retained under the new tax regime.
These include exemptions on gratuity under Section 10(10), leave encashment under Section 10(10AA), and compensation received under a Voluntary Retirement Scheme (VRS) under Section 10(10C), subject to prescribed conditions and limits.
These exemptions can provide significant relief for employees receiving retirement benefits.
In other words, the new tax regime may offer fewer deductions than the old system, but it does not eliminate tax benefits altogether. From the Rs 75,000 standard deduction to NPS contributions, family pension relief and retirement-related exemptions, taxpayers still have a few opportunities to reduce their taxable income.
Before choosing between the old and new tax regimes, it is worth checking whether these available benefits could make the new regime more attractive for your financial situation.
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