The brand new tax regime, launched in Price range 2020 and additional up to date in Price range 2025, affords decrease tax charges however removes many conventional deductions. Nonetheless, a number of key exemptions and deductions are nonetheless out there to salaried people. Understanding these will help optimize tax planning and cut back taxable revenue.
Price range 2025 Replace
Ranging from 1st April 2025, a salaried particular person incomes as much as ₹. 12,00,000 can be exempted from paying revenue tax beneath the brand new tax regime. Whereas the brand new tax regime affords decrease tax charges, a number of deductions and exemptions are nonetheless out there to salaried people.
Eligibility
The brand new tax regime applies to all people, together with males, girls, senior residents, and tremendous senior residents. It’s the default tax regime, that means taxpayers should particularly go for the previous regime in the event that they want to declare different deductions.
Listing of Deductions Are Allowed to Salaried People in New Tax Regime
Though many conventional deductions are eliminated beneath the brand new tax regime, some key exemptions and deductions can nonetheless assist cut back taxable revenue. Listed here are the deductions out there:
#1 – Normal Deduction
₹. 75,000/- for salaried people and pensioners (as per Price range 2025).
Household pensioners: ₹. 15,000 or 1/third of pension revenue, whichever is decrease.
#2 – Curiosity Earnings Exemption
Curiosity obtained on Put up Workplace financial savings accounts beneath Part 10(15)(i), as much as ₹. 3,500.
#3 – Gratuity
Non-public-sector workers can declare tax exemption on gratuity as much as ₹. 20,00,000 beneath Part 10(10).
#4 – Adhoc Deduction on Hire
A flat 30% deduction on lease paid (if relevant).
#5 – Residence Mortgage Curiosity
Curiosity on house loans might be deducted if the property is rented out.
#6 – Employer Contribution to NPS
Employer contributions to NPS beneath Part 80CCD(2) are allowed as much as 14% of Primary Wage + Dearness Allowance (DA) for central authorities workers and 10% for others.
#7 – Transport Allowance
Specifically-abled people can declare a transport allowance exemption.
#8 – Deposits in Agniveer Corpus Fund
Contributions beneath Part 80CCH(2) are eligible for deduction.
#9 – Journey Bills
Deduction beneath Part 80JJAA for journey bills incurred for work.
#10 – Depreciation Deduction
Depreciation beneath Part 32 is allowed, besides for extra depreciation.
#11 – Allowance for Journey for Employment
Exemption out there for travel-related employment bills.
#12 – Life Insurance coverage Maturity Quantity
Earnings from life insurance coverage insurance policies beneath Part 10(10D) is tax-free.
#13 – Go away Encashment
Go away encashment obtained at retirement or as a retirement cum dying profit is exempt beneath Part 10(10AA).
#14 – Capital Positive aspects Exemptions
Exemptions beneath Part 54 for long-term capital positive factors on the sale of home property.
Exemptions beneath Part 54F for long-term capital positive factors on the sale of any asset aside from a home property.
#15 – PPF and Sukanya Samriddhi Account
Curiosity and maturity quantities from Public Provident Fund (PPF) and Sukanya Samriddhi Account stay tax-free.
Exemptions and Deductions Eliminated within the New Tax Regime
Whereas the brand new tax regime supplies decrease tax charges, many conventional deductions had been eliminated when it was first launched in Price range 2020, and so they proceed to be unavailable beneath Price range 2025. These embrace:
- Go away Journey Allowance (LTA).
- Home Hire Allowance (HRA) beneath Part 10(13A).
- Part 80C deductions (resembling EPF, ELSS, PPF, LIC premium, tuition charges, and so forth.).
- Part 80D deduction for medical insurance coverage premiums.
- Curiosity deduction on house loans for self-occupied properties.
- Skilled tax exemption beneath Part 16(iii).
- Meals and meal coupons beneath Part 17(2)(viii).
- Deductions beneath Part 80CCD(1B) (further ₹. 50,000 NPS contribution).
Ultimate Ideas
Though the brand new tax regime eliminates many conventional deductions, it nonetheless supplies important reduction by the usual deduction, NPS employer contributions, house mortgage curiosity (for rented properties), and different exemptions. By understanding the deductions out there, salaried people can optimize their tax planning and cut back their general tax legal responsibility beneath the brand new tax regime.
If you’re unsure about which tax regime to decide on, consider your tax legal responsibility beneath each regimes earlier than making a choice. You may verify this text on how you can verify tax financial savings in 2 minutes article too. A well-planned strategy will help you maximize financial savings whereas making certain compliance with tax legal guidelines.
Tell us your ideas on the brand new tax regime and the way it impacts your tax planning within the feedback beneath!
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