Tax Deductions Available in New Tax Regime for FY 2023-24

What Are The Tax Deductions Available in new Tax Regime?

Basically, the new tax regime is not really meant for getting tax deductions at all. This does not promote any compulsory investments for getting tax deductions. This may be due to the reason that the Income Tax department may not have sufficient staff strength for scrutinizing the tax deductions one has claimed in his return.

Rather it is beneficial to enhance the basic exemption limit and minimize the average tax rates so that Income Tax department can do away with the tax deductions. But majority of the Indians who just buy life insurance policies at the end of February or March to just save tax, whether it will benefit them, only time can say that.

What Deductions are allowed under New Tax Regime?

Under new Tax regime only the following tax deductions are available:

What Deductions are allowed under New Tax Regime?
Type of Deductions	Eligibility	Amount
Standard Deduction-Salary	Yes	Rs. 50,000
Standard Deduction-Pension	Yes	Rs. 15,000
Professional Tax/ Entertainment Tax- Sec 16	No	NIL
Sec 24(b)- Interest on House Building Loan- Self occupied  House	No	NIL
Sec 24(b)- Interest on House Building Loan- Let Out Property	Yes	No Limit
Employers’ Contribution to NPS U/S 80CCD(2)	Yes	1. Max 14% for Govt Employee                          2. 10% for Others
Exemptions on Terminal Leave Encashment U/S 10(10AA)	Yes	1. Govt Employees- Tax Free ;                                   2. Others- Rs. 25,00,000
Deductions U/S 80(CCH)- Contribution to Agniveer  Corpus	Yes	No Limit

Deductions available under New Tax Regime?/ List of tax deductions available in new tax regime

The following are the summary of deductions that are available under the new tax regime:

• Standard Deduction: Standard deduction for salaried persons and pensioners are allowed under new tax regime;
• Interest on House Building Loan U/S 24(b): Interest on house building loan U/S 24(b) is allowed only for let out property. However, interest paid on the self occupied house is no longer allowed as deductions under new tax regime;
• Leave Encashment U/S 10(10AA): Terminal leave encashment i.e. leave encashment at the time of retirement is allowed as deduction U/S 10(10AA) up to Rs 25 Lakh. This is a great relief for salaried class people;
• Contributions to NPS 80CCD(2): Employers’ contributions to NPS is allowed as deduction in new tax regime U/S 80CCD(2). Maximum permissible limit is 14% and 10% of salary for Govt. and other employees respectively;
• Contribution to Agniveer Corpus U/S 80(CCH): Under the new tax regime any contribution to Agni veer Corpus is allowed as deduction. There is no specific limit in claiming such deduction under the new tax regime.

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FAQs on Deductions available under New Tax Regime?

Primarily this new tax regime has been introduced to abolish all kinds of tax deductions. However, due to some internal and external factors certain tax deductions have been allowed under new tax regime.

Is professional tax deduction available in the new tax regime?

No, not at all. The new Income Tax regime does not allow the Professional Tax deduction from your salary income. It is now allowed only in case of old tax regime.

Is 80C deduction available in the new tax regime?

As an employee you are not eligible to claim any deduction U/S 80C of the Income Tax Act. However, to your utter surprise, the new tax regime allows Employers’ Contribution to NPS U/S 80CCD(2). For Govt. employees it is allowed maximum to the tune of 14% of Salary (Basic+ DA) and for other employees it is 10% of Salary.

Is 80D allowed in the new tax regime?

Unfortunately, even the deduction U/S 80D i.e. payment of premium for health or medical insurance is not allowed as deduction under new tax regime. This is simply because this tax regime( now the default tax regime) has been introduced to do away with tax deductions.