Salaried employees opting for the new tax regime can claim a standard deduction of ₹75,000 while filing their tax return, as reported by Mint. This represents a significant increase from the ₹50,000 standard deduction available under the old tax regime. The enhanced deduction provides immediate tax relief for salaried taxpayers choosing the new regime.
Under Section 80CCD(2) of the Income-tax Act, an employer's contribution to the National Pension System (NPS) is exempt up to 14% of the employee's basic pay under the new regime, according to Mint reports. This deduction is capped at 10% of the basic pay under the old regime. The Finance (No. 2) Act 2024 raised the private-sector cap to 14% for those filing under the new regime, while government employees continue to receive 14% of basic pay plus dearness allowance. For a basic pay plus DA of ₹12 lakh, the extra 4% deduction at 14% saves approximately ₹14,400 annually at the 30% tax slab.
Under Section 24(b) of the Income-tax Act, interest paid on a home loan can be claimed as a deduction without any limits against rental income from a let-out property, as reported by Mint. This benefit applies to both old and new tax regimes, with no limit for interest deduction under Section 24(b). For self-occupied properties, a deduction of up to ₹2 lakh on home loan interest is available only under the old tax regime, while the new regime offers no such restriction.
Family members of deceased employees (other than ex-servicemen) receiving family pension can claim a deduction of one-third of the pension up to a maximum of ₹25,000 under the new tax regime, according to Mint reports. The maximum deduction limit is ₹15,000 under the old regime. This provision offers significant tax relief for families of government employees and private sector workers who receive family pension benefits.
Certain tax-free perquisites can help reduce an employee's taxable salary under both old and new tax regimes, as reported by Mint. These include telephone or mobile phone provided for official use, transport facility through rail or airways at concessional rates, recreational facilities like club membership, and reimbursement of medical expenses for specified diseases. Meal card benefits of up to ₹200 per meal are tax-exempt, though this benefit is available only under the old regime for AY 2026-27, becoming available under both regimes from FY 2026-27 onwards.
