Even under the new tax regime, a few tax benefits under the new tax regime still apply. You can claim the Rs 75,000 standard deduction (salaried and pensioners), the employer’s NPS contribution under Section 80CCD(2), the family pension deduction, the Agniveer Corpus Fund deduction under Section 80CCH, and interest on a let-out house property loan.
Many taxpayers switched to the new tax regime when India introduced the optional tax slabs with lower rates but fewer exemptions. If you’re among them, the good news is: a few familiar tax benefits still survive under the new regime. Knowing which ones apply can reduce your tax outgo without the paperwork headache. Here’s a straightforward guide to five tax breaks you can continue to claim even after opting for the new tax regime.
Standard deduction for salaried employees
The standard deduction of ₹50,000 remains available to salaried individuals and pensioners under the new regime as standard deduction of ₹75,000. This is an automatic reduction from your salary income — no bills or receipts needed. For salaried taxpayers this is the simplest deduction to apply, and it directly lowers the taxable salary component.
Employer contribution to NPS (Section 80CCD (2))
If your employer contributes to your National Pension System (NPS) account, that contribution is deductible from your salary income under Section 80CCD (2). This benefit is outside the scope of the new regime’s switched-off exemptions, so the employer’s matching or fixed contribution continues to reduce your taxable salary, up to specified limits.
Employer contribution to EPS and family pension
Contributions made by your employer to certain statutory schemes such as Employee’s Pension Scheme (EPS) and family pension schemes are not taxed under the new regime. In practice, these employer contributions are treated as exempt, which helps keep your taxable salary lower without any additional filing steps on your side.
Exemptions for perquisites and allowances (limited)
Some perquisites and specific allowances retain their tax-exempt status even if you choose the new regime. Examples include certain non-monetary perquisites or reimbursements that are specifically exempt by law. However, many allowances are disallowed under the new regime, so it’s important to check the nature and citation of the exemption before assuming it applies.
Leave encashment and gratuity on retirement
Payments received on retirement — like gratuity and leave encashment — continue to enjoy exemptions under the new regime, subject to the usual limits and conditions laid down in the Income Tax Act. If you expect such receipts, they won’t necessarily be fully taxable just because you opted for the new slab rates.
Quick checklist to use these benefits
- Confirm you’ve indeed opted for the new tax regime in your ITR or through your employer’s salary processing.
- For employer contributions (NPS, EPS), ensure these are recorded correctly in Form 16 and your payslips.
- Keep track of the nature of any perquisites or allowances to verify their exempt status.
- For retirement payments, maintain documentation (service records, employer certificates) to support exemptions.
- If in doubt, run a quick tax comparison (old vs new) for your financial year — sometimes the old regime still gives a lower tax liability depending on investments and deductions.
Opting for the new tax regime doesn’t mean you lose every benefit. Standard deduction for salary, employer contributions to NPS and certain statutory pension schemes, and exemptions on retirement receipts still provide relief. Use these where applicable, verify entries in Form 16 and payslips, and consider a quick comparison each year before locking in your choice.
Frequently Asked Questions (FAQ)
Are any deductions allowed under the new tax regime?
Yes. While the new regime removes most exemptions, a few useful benefits remain, including the standard deduction, employer NPS contribution under Section 80CCD(2), family pension deduction, the Agniveer Corpus Fund deduction under Section 80CCH, and interest on a let-out house property loan.
What is the standard deduction under the new regime?
Salaried individuals and pensioners get a standard deduction of Rs 75,000 under the new regime. It is applied automatically from your salary income with no bills or proof required.
Is the employer’s NPS contribution deductible in the new regime?
Yes. The employer’s contribution to your NPS account is deductible under Section 80CCD(2), even under the new tax regime, subject to the prescribed percentage of your salary.
Can I claim home loan interest under the new regime?
Interest on a self-occupied home is not deductible in the new regime, but interest on a let-out (rented) property can still be set off against the rental income, subject to the applicable rules.
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