Updated on 01.02.2025
The taxpayers who opt for a New regime are still eligible to claim certain tax exemptions. Here are the details of incomes that are as well exempted from income tax in the event you opt for the new tax regime.
Relief under Section 87A:
For the Financial Year 2025-26 (AY 2026-27), an assessee whose taxable income is less than Rs.12 lakh which essentially is a rebate on the tax liability of up to ₹60,000 in absolute terms, according to the new slabs and respective tax rates announced in budget 2025.This means, if your total tax payable is less than Rs.12 lakh then you will not have to pay any tax.
However, for the financial year 2024-25 tax rebate under Section 87A of the Income Tax Act,is net taxable income up to Rs 7 lakh in the new tax regime were eligible for a tax rebate ofRs 25,000..
Under Section 115BAC(1A) of the Income Tax Act, marginal relief is available exclusively to resident individuals with taxable income just above ₹12 lakh in FY 2025-26, taxpayers will not have to pay the full tax amount when their income slightly exceeds the tax-free threshold under marginal tax relief provision. This ensures a fair tax burden by preventing sudden spikes in tax liability for small income increases.
To gain deeper insights into what is marginal tax relief for income slightly above Rs.12 lakh, you may explore the article “MARGINAL TAX RELIEF FOR RESIDENT INDIVIDUALS WITH INCOME SLIGHTLY ABOVE ₹12 LAKH“
Deductions Allowed Under the New Income Tax Regime:
Standard Deductions:
The Standard deduction of Rs 75,000 is allowed u/s Section 17(2)(viii) is allowed for Salaried/Pensioner Tax payers opting for New Tax Regime. Family Pensioners are also allowed standard deductions of Rs.25000 under section 17(2)(viii).
Post office savings account interest
Post office savings account interest up to Rs.3,500 for single accounts and up to Rs.7,000 for joint accounts under 10(15)(i) of the Income Tax Act. The balance interest amount if any needs to be included in the gross income. Note: Individuals opting for the new tax regime are not eligible to claim deduction under section 80 TTA or 80TTB but exemption under 10(15)(i) is available to them in the new tax regime as well.
Interest received from EPF & PPF
Interest received from EPF & PPF: EPF or PPF is one investment vehicle that falls under the Exempt-Exempt-Exempt (EEE) category. In the new tax regime, the annual contribution made to PPF accounts is not eligible for deduction under sec 80c. However, interest earned on PPF contributions or maturity proceeds from PPF is exempt from tax in the new tax structure as well.
Proceeds of Insurance Policy Maturity:
The amount received from life insurance policy maturity: U/S 10(10D) of Income Tax Act 1961 maturity proceeds received from the life insurance policy are exempt from capital gain tax. This exemption is still available in the new tax regime.
Gratuity Received from employer:
Gratuity received from employer: For private-sector employees, gratuity up to Rs.20 lakh in a lifetime is exempt from income tax even in the new tax regime. Nevertheless, gratuity received due to the death of a private sector employee will be tax-exempt irrespective of any amount. In the case of Government employees, gratuity is exempt from tax irrespective of any amount.
Employer’s Contribution to Notified Pension Account (Section 80CCD(2))
In contrast, under the new tax regime, deductions under Sections 80CCD (1) and 80CCD(1B) are not permitted. However, deductions under Section 80CCD (2) are allowed up to 14% of the salary for contributions made by government employers and up to 10% for contributions made by private employers.
Additional Employee Cost (Section 80JJAA)
Section 80JJAA allows for deductions of up to 30% of additional employee costs incurred by the employer. This deduction aims to encourage employment generation and provides relief to businesses.
Transport Allowance for Differently-Abled Employees
Differently-abled employees, also known as divyang, are eligible for deductions on transport allowance. This allowance covers commuting expenses between their place of residence and place of work.
Conveyance Allowance for Office Duties
Conveyance allowance given to employees for the performance of office duties remains eligible for deduction under the new tax regime. This allowance covers expenses related to transportation incurred during work-related activities.
Tour and Travel Allowance
Any allowance provided by employers to meet the cost of official tours and travels is considered an eligible deduction under the new income tax regime. This includes expenses incurred for business-related travel and accommodation.
Daily Allowance for Duty Travel
When an employee works at a location other than their normal place of duty, any daily allowance provided to cover ordinary charges is eligible for deduction. This allowance helps employees meet day-to-day expenses during duty travel.
Donations to Charitable Institutions
Donations made to eligible charitable institutions and funds are still eligible for deductions under the new tax regime. Taxpayers can claim deductions under Section 80G of the Income Tax Act, subject to specified conditions and limits.
The list of exemptions and deductions that a taxpayer will have to forgo while choosing the new tax regime is attached below in Annexure-I.
Rebate and Deductions available to Tax Payers for old tax regime:
Here are the details of incomes that are exempted from income tax in the event you opt for the old tax regime.
- Section 17(2)(viii): For the salaried class and pensioners, a standard deduction of Rs.50000/- is allowed u/s17(2)(viii) of the Income-tax Act, 1961.Family Pensioners are eligible for Standard deductions of Rs.15000/-
- Section 80 C: Individuals are eligible for the tax rebate on their investments u/s 80 (C) of the IT Act to the maximum limit of Rs. 150000.00 (Rupees one lakh and fifty thousand) in a financial year (applicable for FY 2015-2016). Contribution to EPF, NPS, PPF, Senior Citizen Savings Scheme, investments in NSC,/ Equity Linked Saving Schemes (ELSS), Unit Linked Insurance Policies (ULIPs), Sukanya Samriddhi Scheme, Tax Saving term deposits of banks, a premium paid on Life Insurance policy, tuition fee for maximum two children (fees for private tuition/ coaching classes are not eligible) and repayment of Housing Loan, are the investments eligible for tax rebate under Sec.80 C of IT act.
3). Section 80CCC: Contribution to certain pension funds like the Annuity plan of LIC and other insurers.
4). Section 80 CCD (1A): The deduction under section CCD (1A) is available to both salaried and non-salaried individuals who contribute NPS scheme to the extent of Rs.150000/- (Rupees one lakh and fifty thousand). However, the maximum amount allowed as a deduction is 10% of salary in a financial year and in the case of non-salaried individuals 10% of Gross total income in a financial year.
5). Section 80 CCD (1B): Deduction towards contribution to New Pension Scheme by the employee. In the budget 2015, a contribution of Rs.50000/- to NPS qualifies for a tax rebate in addition to Rs.150000/- u/s.80CCE.
6). Section 80CCE: Total limit of deduction eligible u/s -80C, u/s 80CCC 80 CCD (1) is Rs.150000/-(Rupees one lakh and fifty). In the budget 2015, an additional rebate of Rs.50000/- allowed for the contribution to NPS (u/s. 80CCD (1B) announced by the Finance Minister. Hence, the total limit under 80CCE for the FY 2015-16 is Rs.200000/-.
7). Section 80D: Deduction under this section is available to an individual or a HUF. A deduction of Rs. 25,000 can be claimed for insurance of self, spouse, and dependent children. An additional deduction for the insurance of parents is available to the extent of Rs 25,000 if they are less than 60 years of age or Rs 50,000/- if parents are more than 60 years old. In case, a taxpayer’s age and parents’ age is 60 years or above, the maximum deduction available under this section is to the extent of Rs. 100,000. The amount spent on preventive health check-ups (maximum of Rs.5000/-.) is subsumed under this limit. Payment for preventive health check-ups is the cost incurred for disease prevention (diagnosis), as opposed to disease treatment like a master check-up, etc.).
8). Section 80 DD: Disability-related tax benefit in case of the dependent spouse, child, parent, or sibling who is disabled. A deduction of Rs.75000/- for partial disability and Rs.125000/- for severe disability is allowed. The full amount of deduction will be allowed, without insisting on bills/insurance premiums paid by the income tax office.[For conditions for the assessment of partial or full disability, read the paragraph under sec. 80 U]
9). Section 80DDB: Tax rebate on medical treatment expenditure for treatment of specified diseases like cancer, or AIDS for self and dependents, the deduction allowed up to Rs.40000/-.
From FY 2018-’19 onwards increase in the deduction limit for medical expenditure for certain critical illnesses increased to Rs.1 lakh for all senior citizens above 60 years under section 80 DDB.
10). Section 80E: An individual can claim an income tax deduction for interest paid on an education loan availed for the self, spouse, or his/her children u/s 80E of the IT Act. The guardian appointed by the Court for a minor student is also eligible for tax deduction under the same section. One more benefit is that no upper limit for claiming a deduction either on the amount of interest paid or the rate of interest paid. The deduction can be claimed for up to 8 years or closure of the loan whichever is earlier. If the interest is paid during the moratorium period, the time limit of 8 years begins from the date of the first repayment of interest on the loan. It is important to note that the tax benefit is restricted for education loans availed from the bank, notified financial or charitable institutions. In other words, the education loan availed from the employer, family, and friends does not come u/s 80E. Education loans availed for studies abroad are also eligible for tax deduction u/s 80E.
11). Section 80 EE: An additional exemption of Rs.50000/- per annum towards interest paid by the first-time house buyers with effect from April 1, 2016, available u/s.80EE. The Housing loans up to Rs.35 lakh were sanctioned by a bank in the financial year 2016-17 and the value of the property purchased under the loan below Rs.50 lakh is eligible for the deduction. (Announced by the Finance Minister in his budget speech on February 29, 2016).
12) Section 80EEA: A new section 80EEA in the Income Tax Act is proposed in the budget of 2019. This section provides a deduction in respect of interest up to Rs 1.5 lakh on a loan taken for residential house property from any financial institution subject to the following conditions:
(i) the loan has been sanctioned by a financial institution during the period beginning on April 1, 2019, to March 31, 2020;
(ii) the stamp duty value of the house property does not exceed Rs 45 lakh;
(iii) the assessee does not own any residential house property on the date of sanction of loan. This will result in enhanced interest reduction of up to ₹3.5 lakhs on loans for self-occupied properties of affordable homes.
13). Section 80EEE: First-time home buyers (the person who does not already own a house property in his name), who have availed a housing loan of Rs.25 lakhs or below on or after 01.04.2013, can claim an additional tax deduction of Rs.100000.00 (Rupees one lakh) on interest paid on that loan under section 80EEE subject to the condition that the value of the residential property should not exceed Rs.40 lakh (Rupees forty lakh). If the interest paid is less than Rs.100000.00 (one lakh), in the first year, the unclaimed deduction can be utilised in the subsequent year. (It is important to note that a deduction up to Rs.200000.00 (Rupees two lakh) on taxable income is separately allowed under section 24.
14). Section 80G: Tax rebate can be claimed on specific donations to make prescribed funds and institutions. The tax benefit u/s 80G is eligible for the amount of donation within 10% of gross income. Donations over 10% of gross income in a financial year are not eligible for tax exemption. It is essential to make cash or cheque payments towards the donation to be eligible for tax exemption.
15). Section 80GG: The individual tax assessees who do not get House Rent Allowance from their employers were eligible for the rent paid on their house up to a maximum limit of Rs.2000/- per month (Rs.24000/-per annum). With effect from April 1, 2016, the above limit of deduction allowed is increased from Rs.24000/- p.a to Rs.60000/- p.a.
16). Section 80 U: Disability-related tax benefit to an individual: A deduction of Rs.75000/- for partial disability and Rs.125000/- for severe disability is allowed in FY 2015-16. The full amount of deduction will be allowed irrespective of the amount of the expenses incurred or the insurance premium paid. An individual suffering from a disability himself gets tax benefits under Section 80U, while an individual gets tax benefits under Section 80DD if any dependent family member of the individual is suffering from a disability.
[Every individual claiming deduction u/s 80DD or 80U shall produce a copy of the medical certificate issued by the appropriate authority in the form and manner as may be prescribed along with the return of income u/s.139 of the IT act. Where the condition of disability requires the reassessment of its extent after a period is stipulated in the certificate, deductions are allowed after the expiry period mentioned in the certificate only after the new certificate is obtained. The disabled means above 40% of disabilities to a person ( above 80% is considered as severe disability) due to diseases like blindness, low vision, leprosy-cured, hearing impairment, locomotor disability, mental retardation, mental illness, Autism, cerebral palsy, etc.]
17). Section 80 TTA: A rebate of Rs.10000 available u/s 80 TTA on interest earned only on an SB account held in a bank, co-operative bank, or a post office from the gross total income of individual taxpayer or a HUF. With the introduction of 80TTB exclusively for senior citizens, deductions under section 80TTA are not available to senior citizens.
18) Section 80 TTB: From the Financial year 2018-19, Senior citizens who have received deposit interest (including SB and Recurring Deposits interest) up to Rs.50000/- in a financial year are exempted from tax under Sec.80TTB. However, Senior Citizens whose aggregate annual deposit interest income exceeds Rs 50,000/- need to pay Income tax for the deposit interest income over and above Rs 50,000/-. Further, aggregate annual deposit interest income up to Rs 50,000/- for Senior Citizens is also exempted from TDS and they need not submit form 15 H for the annual deposit interest income up to Rs 50,000/-. With the introduction of Sec 80 TTB, Sec 80 TTA will not apply to Senior Citizens –ie SB interest exemption of Rs 10,000/- is not separately available to senior citizens. Exemption under Section 80 TTA is available to others who are not Senior Citizens.
19)Section 10(13): The amount of HRA exemption is deductible from the total income before arriving at a taxable income under section 10(13). The exemption for HRA benefit is the minimum of;
A). Actual House Rent received from the employer
B). Actual House rent paid to the landlord minus 10% of basic salary*
C). 50% of the employee’s basic salary if he/she lives in Metro cities or 40%of basic salary* in non-metro areas.
*Basic Salary is inclusive of DA (wherever commission received by the employee based on a fixed percentage of turnover achieved by the employee that income is also to be included in basic salary).
The deduction will be available only for the period of occupying the rented house, not for the entire year. At least two rent receipts are to be produced as evidence of rent- paid, one rent receipt at the beginning of the financial year, and another receipt at the end of the financial year. The rent-paid receipts should be duly on the revenue stamp by the landlord. People who pay rent less than Rs.3000/-per month need not produce rent receipts. )
19). Section 87(A): A tax rebate is available on income up to Rs. 5 lakh under the old regime, essentially a rebate on the tax liability of up to Rs.12500/-
20). Section 24: In addition to the rebate on repayment of the housing loan principal amount under section 80 C, the interest portion paid on the housing loan offers a deduction up to Rs.200000.00 (Rupees two lakh) on taxable income separately under section 24.
If the house is not self-occupied: The method of computation of Income/Loss from House property under Section 24 (If the house is not self-occupied): In the case of non-self-occupied property, the interest paid is reduced from the rent received for computation of Income from House Property. In some cases, the Interest paid may be more than the Rent earned which will result in a loss from House Property. This Loss is allowed to be a set-off with Income from any other head.
Net Annual Value (Actual rent or expected rent whichever is higher) minus [Muncipal tax and local taxes paid + Statutory deduction @30% + Interest on borrowed capital]= Income chargeable under head house property. From the Financial Year 2017-18 onwards, a loss of a maximum of Rs. 2 Lakhs only is allowed to be set off under section 24 even for the house which is not self-occupied
Section 80 QQB: The primary objective of Section 80QQB is to provide tax relief to authors who earn royalties from selling their books. By reducing their tax burden, authors can potentially reinvest their earnings into their creative pursuits, further contributing to the country’s literary and cultural landscape. Under section 80QQB, authors can claim an income tax deduction of up to Rs. 3 lakhs or the amount of royalty income received, whichever is lower. The taxpayer must have authored or co-authored a book that falls under the literary, artistic or scientific work category. Authors of books do not include brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, school textbooks, and other similar publications. In case the individual has another source of income, then only the amount received as royalty can be claimed as a deduction.
Section 80RRB: Section 80RRB of the Income Tax Act allows individual taxpayers to claim deductions on income received as royalties or copyright fees for patents. Only original patent holders can claim the deduction under Section 80RRB.If the royalty payments are received from a foreign country, then the deduction can be claimed only with respect to the royalty payments received within 6 months of the completion of the financial year in which the income is earned. This deduction is only available for resident individuals i.e. HUF or Non-residents cannot claim this deduction. Documentary evidence of royalty received is to be produced for deductions.
Note: Deductions under 80 QQB and 80 RRB is allowed only if the assessee opts for the old tax regime.
ANNEXURE-I
Here is the list of exemptions and deductions that a taxpayer will have to forgo while choosing the new tax regime.
- Clause (5) – Leave travel concession;
- Clause (13A) – House rent allowance;
- Clause (14) – Special allowance detailed in Rule 2BB (such as children’s education allowance, hostel allowance, transport allowance, per diem allowance, uniform allowance, etc.);
- Clause (17) – Allowances to MPs/MLAs;
- Clause (32) – Allowance for clubbing of income of minor;
- Exemption for SEZ unit under section 10AA;
- The deduction for entertainment allowance and employment / professional tax as contained in Section 16;
- Interest under section 24 in respect of the self-occupied or vacant property (loss under the head IFHP for the rented house shall not be allowed to be set off under any other head and would be allowed to be c/f as per extant law);
- Additional depreciation under section 32(1)(iia);
- Deductions under sections 32AD, 33AB and 33ABA;
- Various deductions for donation or expenditure on scientific research contained in sub-clause (ii) or sub-clause (iia) or sub-clause (iii), of sub-section (1) or sub-section (2AA) of section 35;
- Deduction under section 35AD or 35CCC;
- Deduction from family pension under clause (iia) of section 57;
- Any deduction under chapter VI-A (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc.). However, deduction under sub-section (2) of section 80CCD (employer contribution on account of the employee in notified pension scheme) and section 80JJAA (for new employment) can be claimed.
Can you please guide me how to fill in individual ITR forms on line by practical lessons without any obligation.I am retired Bank Sr.Manager .I want to save C.A ‘s fees.
You can take the help of Tax Return Preparer (TRPs). First 3 years of filing of IT-Returns, no fee to be charged to the Assesse. The charges will be paid by the Government to the TRP. After 3 years the maximum amount to be charged by TRP is INR 250 per Income Tax Return per A.Y. You may visit the website http://www.trpscheme.com. Once you visit this site you will get to know the approved list of Tax Return Preparers of your locality. In the meantime you can learn and file the return yourself as it is easy and simple.
You can file tax returns yourself directly with the income-tax department. However, as per income tax rules, an individual assessee can file physical returns only if her annual income was less than Rs.5 lakh in the previous year and there is no refund claim. At the same time, “such a taxpayer should not have claimed any tax relief for taxes paid abroad, and should not have assets or income located abroad,” The taxpayer should take a stamped and numbered acknowledgment when the return is filed physically.
Item no.17
Section 87(A)
Is it correct that tax credit amount has been reduced to ₹2500 as well as prescribed income limit reduced to ₹350000
In the last budget (2017)the Finance Minister has provided a maximum Rebate of Rs. 2,500 under Section 87A.Your Total Income Less Deductions (under Section 80) is equal to or less than Rs 3,50,000.
Sir, I am getting disability pension as armed forces pensioner. Is this disability pension examited from income under Income tax Act.
Please reply and clerify.
Every individual claiming deduction u/s 80DD or 80U shall produce a copy of medical certificate issued by the appropriate authority in the form and manner as may be prescribed along with the return of income u/s.139 of IT act. Where the condition of disability requires the reassessment of its extent after a period is stipulated in the certificate, deductions are allowed after the expiry period mentioned in the certificate only after the new certificate is obtained. The disabled means above 40% of disabilities to a person ( above 80% is considered as severe disability) due to diseases like blindness, low vision, leprosy-cured, hearing impairment, locomotor disability, mental retardation, mental illness, Autism, cerebral palsy etc.
1
I have purchased a house in which i have paid 238000/- stamp duty & 20000/- registration fees. Should i eligible for tax rebate under 80 c?
Yes, both registration charge,stamp duty paid and other expenses which are directly related to the transfer are allowed as a deduction under Section 80C.
Sir i am govt employee I filled my itr of 17-18 on dt 25th July 17 and e-verified the same by net banking in which my refund is showing of amt approx 6200/- but till Dt it is in e-verified status and not processed nor the refund is credited and also no intimation received on my registered email. Sir what are the cause may be plz suggest
In my case, they have directly credited the refund amount to my SB account. Please check your account, if not credited, contact ITO personally and ask for the reason for non payment.
Unless you receive a notice for selective scruitiny of you ITR before the end of FY 2017-18 ITRProcessed status will be displayed in the status colum.wait till end of the year thereafter return is unlikely to be taken up for scruitiny.Goodluck
Sir.
Good evening.
I wish to know that quarterly interest paid on SBI 10 years Senior Citizen Saving Scheme is eligible under 80 TTB for IT rebate upto 50000 from FY 2017 – 2018.
Thanks.
pkyadav_56@yahoo.com
Yes.
Yes,any interest received above Rs50000/ attracts TDS
Sir
I want to know the procedure of enabling Macros on Apple Laptop for filing ITR so that entries in the ITR columns can be validated.
I shall appreciate and thanki you of a small article is written
Sorry, sir, I do not have the technical knowledge to advise you on the above matter.