Know Your Income Tax Regime: 8 tax deductions that you get under new tax regime
The old tax regime provides tax benefits of Rs 1.50 lakh under Section 80C of the Income Tax Act, 1961. It also provides tax benefits on HRA, health policies, and NPS Tier-I account deposits. The new tax regime, on the other hand, also provides tax benefits such as standard deduction, conveyance allowance, and transport allowance.
The new tax regime is the default setting for new tax payers. However, they are free to select the old tax regime. When selecting between the old and the new tax regime, the general perception is that the old regime helps save more tax compared to the new one if you are in a salary bracket above Rs 10 lakh per annum. A lot of people think the new tax regime is friendly for those without many investments. Some taxpayers in the old tax regime think that if they switch to the new tax regime, they have to forego many of tax benefits that they avail. But, do you know that the new tax regime also offers a number of tax benefits. The selection of the tax regime is entirely up to you. But here, we are giving a list of tax benefits that the new tax regime offers.
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Standard deduction
A standard deduction of Rs 50,000 from your salary is available under the new tax regime.
NPS
A taxpayer can also claim a deduction under Section 80CCCD(2) of the Income Tax Act, 1961, for the employer's contribution to the employee's NPS account.
Section 24B
The new regime also offers a deduction of interest payment on home loan for the let-out property.
Conveyance allowance
A person can claim tax deduction to meet the conveyance expenditure incurred as part of their employment.
Transport allowance
It is not avalable to all new tax regime choosers. This allowance is available only in case of a specially-abled person.
Daily allowance
The dedcution can be claimed by an individual to meet ordinary regular charges or expenditures they incur on account of their absence from their regular place of duty.
Compensation
It is available if it has been received to meet the cost of travel on an official tour or transfer.
Prerequisites
A tax payer under the new regime can claim it for official purposes like fuel reimbursement, company car, etc.