Thinking New Tax Regime Means No Savings? These Deductions Prove You Wrong!

From FY 2023-24 onwards, the New Tax Regime under Section 115BAC has become the default tax structure in India. It offers lower slab rates but denies most common deductions available in the old regime. However, many taxpayers mistakenly believe that ‘new regime’ means ‘no deductions’. That’s not true! You can still save tax using some key deductions — even under the new tax regime.

✅ Deductions You Can Still Claim in the New Tax Regime (FY 2024-25)

Standard Deduction – ₹75,000

You can claim a flat ₹75,000 deduction from your gross salary or pension income.

Family Pension Deduction – ₹25,000

If you receive family pension, you can claim up to ₹25,000 as deduction.

Employer’s Contribution to NPS (Section 80CCD(2))

Deductible up to 14% of salary for government employees, 10% for private sector.

Agniveer Corpus Fund Deduction (Section 80CCH)

Agniveers can claim full deduction of contributions to the Agniveer Corpus Fund.

Employer Hiring Deduction (Section 80JJAA)

Business owners can claim 30% deduction on additional employee cost for 3 years.

Retirement Benefits Exemptions

Gratuity, leave encashment, commuted pension, and VRS compensation are exempt as per limits.

Transport Allowance for Disabled Employees

Still allowed under the new regime for persons with disabilities.

Interest on Home Loan (Let-Out Property Only)

Interest on rented house property is deductible under Section 24(b).

📊 Summary of Allowed Deductions

Deduction/Exemption	Allowed in New Regime?
Standard Deduction (Salary/Pension)	✅ ₹75,000
Family Pension	✅ ₹25,000
Employer’s NPS (80CCD(2))	✅ Up to 14%/10%
Agniveer Corpus Fund (80CCH)	✅ Fully allowed
New Employee Hiring (80JJAA)	✅ 30% for 3 yrs
Gratuity, Leave Encashment	✅ As per limits
Transport Allowance (Disabled)	✅ Yes
Home Loan Interest (Let-Out Only)	✅ Yes

❓ Frequently Asked Questions

Q1: Can I claim deductions like 80C or 80D in the new tax regime?

No. Deductions under 80C (like PPF, ELSS), 80D (medical insurance), and others are not allowed.

Q2: How do I claim standard deduction in the new regime?

It is automatically applied while filing ITR, if you select the new regime.

Q3: Is HRA exemption allowed in the new tax regime?

No. House Rent Allowance (HRA) is not exempt under the new regime.

Q4: What about donations under 80G?

Donations under 80G are not deductible if you opt for the new tax regime.

Q5: Is the 87A rebate still available?

Yes. If your taxable income (after all eligible deductions) is below ₹7 lakh, you get full rebate under Section 87A.

📝 Conclusion

The new tax regime doesn’t mean zero tax benefits. You can still save smartly if you know which deductions and exemptions are permitted. From FY 2024-25, with increased standard deduction and select benefits retained, many salaried taxpayers may find this regime surprisingly beneficial. Don’t switch blindly — compare both regimes and choose wisely!