As the income tax return (ITR) filing season for AY 2026-27 is underway, taxpayers choosing the new tax regime should understand the list of exemptions and deductions available to them so that they can file their ITRs correctly and reduce their taxable income.
While the old tax regime offers a wider range of exemptions and deductions, the new tax regime still provides several tax benefits. So, let’s understand the tax rates applicable under the new tax regime, along with the various exemptions and deductions that taxpayers can still claim.
Tax slabs under the new tax regime
Here are the income tax rates applicable to individuals below 60 years of age under Section 115BAC.
Under the new tax regime, taxpayers get a basic exemption limit of ₹4 lakh along with a tax rebate of up to ₹60,000 under Section 87A.
As a result, resident individuals with a taxable income of up to ₹12 lakh in a financial year can effectively pay no income tax. Salaried taxpayers can further benefit from the standard deduction of ₹75,000, making income up to ₹12.75 lakh effectively tax-free in the new regime.
Deductions and exemptions available under the new tax regime
Here is the list of deductions and exemptions available under the new tax regime.
Deduction on home loan interest for let-out property
Taxpayers opting for the new tax regime can claim a deduction on the interest paid on a home loan taken for the purchase or construction of a let-out property under section 24 (b).
There is no upper limit on the amount of interest that can be claimed as a deduction. However, any loss arising under the head “Income from House Property” cannot be set off against income from other heads or carried forward to subsequent years under the new tax regime.
Employer’s contribution to NPS
The new tax regime allows a deduction for contributions made by an employer to an employee’s National Pension System (NPS) account under Section 80CCD(2). The deduction is available up to 14% of the employee’s salary and can be claimed irrespective of the type of employer.
Contribution to Agniveer Corpus Fund
Individuals enrolled under the Agnipath Scheme can claim a deduction for the amount contributed to the Agniveer Corpus Fund on or after 1 November 2022 under Section 80CCH.
In addition, any contribution made by the central government to the individual’s Agniveer Corpus Fund account is also fully deductible while computing total income.
Standard deduction
Salaried employees can claim a standard deduction of ₹75,000 under the new tax regime, thereby helping reduce their taxable income.
Retirement-related exemptions
Exemptions on gratuity [Section 10(10)], leave encashment [Section 10(10AA)], and compensation received under a Voluntary Retirement Scheme (VRS) [Section 10(10C)] are available in the new tax regime, subject to conditions and limits.
Deduction on family pension
Recipients of family pension can claim a deduction of ₹25,000 or one-third of the pension received, whichever is lower, while computing taxable income.
Disclaimer: This is only for informational and educational purposes. Please consult a qualified tax expert for the latest tax laws and regulations.
