ITR Filing: New Tax Regime has become a default tax system since 1 April 2024. Now if a taxpayer wants to adopt an old tax system, then he will have to fill Form 10-EEA every year. The government claims that the new tax system is simple, transparent and low tax rate. However, many people are still in the old tax regimen, as the list of discounts and cuttings available in it is long. However, the New Tax Reizim also has some tax deductions and rebates, which most people do not know.
What is found in the new tax system?
The New Tax Regimm does not have popular discounts like HRA, LTA, 80C, home loan interest, but some important deductions and a large tax rebate still exist. Let’s understand about them in detail:
Standard deduction of ₹ 75,000
Finance Minister Nirmala Sitharaman made a big change in the budget 2024. He had increased the standard deduction on salary and pension to ₹ 75,000, earlier ₹ 50,000. This means that the tax liability of ₹ 75,000 will be reduced directly on earnings from salary and pension.
Exemption on Employer Contribution in NPS
If your employer has contributed to your NPS account, it will be tax-free under section section 80CCD (2). However, it is worth noting that your contribution is not covered for tax exemption.
Discount on Agniveer Corpus Fund
New Tax Regim also provides tax exemption under section 80CCCH. This exemption is available to the youth recruited under the ‘Agneepath Yojana’ on the amount received in the Agniveer Corpus Fund.
Tax deduction on family pension
If you get any kind of family pension, then you can also get a deduction of up to ₹ 25,000 in New Tax Regime. This can also help you reduce your tax liability.
Lata, HRA, Allowances discounts
HRA, LTA, and many special allowances also get tax exemption in New Regime. Actually, like the NPS contribution, these are also allowed by your employer. Therefore, there is a tax exemption on it. Apart from this, a friend or relative gets a gift of up to ₹ 50,000 a year, so it has not to be taxed on it either.
Rebate under section 87A
By FY 2023-24, if your taxable income is ₹ 7 lakhs or less, you get a discount of up to ₹ 25,000. But this discount has been increased to ₹ 60,000 from FY 2025-26. This means that if your tax liability is ₹ 60,000 or less, then you will not have to pay a single rupee tax.
New vs old tax regime: Who is the best?
| Old tax system | New tax system | |
| Tax rates | More | Less |
| Didlescens | Many (80C, 80D, HRA etc.) | Limited (5) |
| Pachidagis | More (documents, investment etc.) |
Less (straight and clean process) |
| Best for | Investors, HRA Claimer |
Tax saving without investment |
Tax experts believe, “If you are taking full advantage of deeds like 80C, 80D, home loan interest, the old tax system can be beneficial for you. But if your income is simple, and you do not invest much, the new system can prove better for you.”
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