Key Income Tax Deductions & Exemptions Available in Both Old and New Regimes

 

The new tax regime (Sec. 115BAC) disallows most deductions (80C, 80D, etc.) and exemptions (HRA, LTA, etc.), but some important benefits continue under both regimes.

1.  Standard Deduction [Sec. 16(ia)]

Available to salaried taxpayers and pensioners.

Old Regime: Flat ₹50,000.

New Regime:

₹75,000 if income ≤ ₹15.5 lakh.

₹50,000 if income > ₹15.5 lakh.

2.  Family Pension Deduction [Sec. 57(iia)

Deduction = lower of ₹15,000 or 1/3rd of family pension.

Available in both regimes (not a Chapter VI-A deduction).

3.  Employer’s Contribution to NPS [Sec. 80CCD(2)]

Deduction for employer’s contribution to employee’s NPS account.

Limit: 10% of salary (Basic + DA) for non-govt employees; 14% for govt employees.

Allowed under both regimes.

4.  Employer’s Contribution to EPF, Superannuation Fund & NPS [Sec. 17(2)(vii)]

Exempt from tax up to ₹7.5 lakh per annum (aggregate).

Allowed in both regimes.

5.  Agniveer Corpus Fund Deduction [Sec. 80CCH]

Contributions by an Agniveer or by Govt. to the Agniveer Corpus Fund – 100% deductible.

Available in both regimes.

6.  Transport Allowance for Disabled Employees [Rule 2BB(2)]

Exemption of ₹3,200 per month.

Available only where the employee is blind, deaf & dumb, or orthopedically handicapped with disability of lower limbs.

Continues under both regimes.

7.  Retirement / Termination Related Exemptions (Sec. 10)

These are exemptions, not deductions, and hence continue in both regimes:

Gratuity [Sec. 10(10)] – up to ₹20 lakh (non-govt employees).

Leave Encashment [Sec. 10(10AA)] – up to ₹25 lakh (for non-govt employees, as amended).

Retrenchment Compensation [Sec. 10(10B)].

VRS Compensation [Sec. 10(10C)] – up to ₹5 lakh.

Commutation of Pension [Sec. 10(10A)].