ITR Filing FY26: With the income tax return (ITR) filing season for Assessment Year (AY) 2026-27 is in full swing, taxpayers opting for the new tax regime should carefully review the deductions and exemptions that remain available. Although the new regime is often seen as a simplified system with fewer tax breaks than the old regime, it still offers several avenues to reduce taxable income and improve tax efficiency.
Understanding these provisions can help taxpayers file accurate returns and avoid missing out on legitimate tax benefits.
Under Section 115BAC, individual taxpayers below 60 years of age are taxed according to a revised slab structure. The new regime offers a basic exemption limit of Rs 4 lakh, with tax rates increasing progressively as income rises.
Additionally, taxpayers can claim a rebate of up to Rs 60,000 under Section 87A. This means resident individuals with taxable income up to Rs 12 lakh can effectively have zero tax liability. For salaried employees, the benefit is even greater because of the standard deduction of Rs 75,000, making annual income up to Rs 12.75 lakh effectively tax-free under the new regime.
The simplified tax structure has encouraged many individuals to shift from the old regime, particularly those who do not claim multiple deductions and exemptions.
Deductions Available Under The New Tax Regime
A common misconception is that the new tax regime eliminates all deductions. While several popular tax-saving provisions are unavailable, certain deductions continue to remain in force. One such benefit relates to employer contributions to the National Pension System (NPS). Under Section 80CCD(2), employees can claim a deduction on contributions made by their employer to their NPS account. The deduction is available up to 14 per cent of salary and applies regardless of whether the employer is from the government or the private sector.
Individuals enrolled under the Agnipath Scheme can also claim deductions under Section 80CCH. Contributions made to the Agniveer Corpus Fund, along with contributions made by the Central Government on behalf of the individual, qualify for tax benefits.
Home Loan And Pension-Related Tax Benefits
Taxpayers with a let-out property can continue to claim deductions on home loan interest under Section 24(b). There is no specified upper limit on the amount of interest that can be claimed. However, losses arising under the head “Income from House Property” cannot be adjusted against income from other sources or carried forward to future years under the new regime.
Family pension recipients are also eligible for a deduction. They can claim Rs 25,000 or one-third of the pension amount received, whichever is lower, while calculating taxable income.
Salaried individuals continue to enjoy the benefit of a standard deduction of Rs 75,000 under the new tax regime. This deduction directly reduces taxable income and can significantly lower tax liability for many employees.
The regime also retains important retirement-related exemptions. Tax benefits on gratuity under Section 10(10), leave encashment under Section 10(10AA), and compensation received through a Voluntary Retirement Scheme (VRS) under Section 10(10C) remain available, subject to prescribed conditions and limits.
(Disclaimer: This article is meant solely for informational and educational purposes. The views and opinions expressed are those of individual analysts or brokerage firms and do not reflect the stance of Times Now. Readers are advised to consult certified financial experts before making any investment decisions.)
