Deductions not allowed for Salary cases under new regime

(i) Leave travel allowance exemption which is currently available to salaried employees twice in a block of four years

(ii) House rent allowance normally paid to salaried individuals as part of salary. This could be claimed as tax exempt upto certain specified limits if the individual was staying in rented accommodation

(iii) Standard deduction of Rs 75,000 currently available to salaried tax payers 

(iv) Deduction available under section 80TTA/80TTB will not be available to the taxpayers. Abhishek Soni, CEO & founder, Tax2win.in says, "As Section - 80TTA and 80TTB are covered under chapter-VIA and the new tax regime excludes deductions under chapter-VIA subject to certain exceptions.Thus, a person opting for the new tax regime shall not be entitled to claim deduction u/s 80TTA(Deduction in respect of Interest on deposits in savings account) and 80TTB(Deduction in respect of Interest on  ..

(v) Deduction for entertainment allowance (for government employees) and employment/professional tax as contained in section 16

(vi) Tax benet on interest paid on housing loan taken for a self occupied or vacant house property: Interest paid on housing loan for such a property could be claimed as a deduction from income from house property which resulted in a loss from house property (as the property was self/occupied or vacant). This loss could be set o against salary income thereby reducing the individuals’ taxable income and net tax liability. This comes under section 24 

(vii) Deduction of Rs 15000 allowed from family pension under clause (iia) of section 57 

(viii) The most commonly claimed deductions under section 80C will also go. This includes the commonly availed section 80C deductions claimed for provident fund contributions, life insurance premium, school tuition fee for children and various specied investments such as ELSS, NPS, PPF etc. However, deduction under sub-section (2) of section 80CCD (employer contribution on account of employee in notied pension scheme—mostly NPS) and section 80JJAA (for new employment) can still be claimed 

(ix) The deduction claimed for medical insurance premium under section 80D will also not be claimable 

(x) Tax benefits for disability under sections 80DD and 80DDB will not be claimable 

(xi) Tax break on interest paid on education loan will not be claimable-section 80E (xii) Tax break on donations to charitable institutions available under section 80G will not be available All deductions under chapter VIA (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) will not be claimable by those opting for the new tax regime. 

The above are part a total of 70 deductions and tax exemptions that will not be available in the proposed new tax regime 

Deductions for business expenditure not allowed under the new regime

• • For assessee opting for new tax regime the total income shall be computing without providing the following exemptions:-

    • Without claiming the exemption, deductions and incentive available under specified section of the IT Act, namely section 10AA, 32AD, 33ABA, 35(1)(ii), 35(1)(iia) , 35(1)(iii), section 35(2AA), 35AD, 35CCC, and 

chapter VI A deductions (except following)

• • • Leave Travel Allowance under clause 5 of Section 10(5).

    • House Rent Allowance under Section 10(13A).

    • Allowances to MPs/MLAs under section 10(17).

    • Allowances for income of minor u/s 10(32) etc.

    • Standard deduction of Rs 50,000 u/s 16.

    • Deductions from House Property Income of interest paid on house loan (Self-occupied/Vacant) u/s 24.

    • Entertainment allowance and employment/ professional tax will not be available.

    • Deduction of Rs 15,000 for family pension u/s 57.

    • Set off of carry forward loss and depreciation from earlier assessment years is not allowed.

    • Without setting off loss under the head income from house property.

    • Without the benefit of accelerated depreciation u/s 32(1)(iia). However normal depreciation can be claimed u/s 32.

You can claim tax exemption for:

Salary Cases :

1. 1. Transport allowances in case of a specially-abled person higher exemption of ₹3,200 per month (₹38,400 per year) .

   2. Deduction U/s 80CCD(2) Employeer contribution of NPS and 80JJAA will be available.

   3. Conveyance allowance received to meet the conveyance expenditure incurred as part of the employment.

In the new tax regime, conveyance allowance is fully taxable, except for certain exemptions applicable to specific cases.

1. Regular Employees

• In the old tax regime, conveyance allowance was exempt only if it was specifically granted for official duties.

• Under the new tax regime, conveyance allowance is fully taxable, meaning the entire amount is added to your salary and taxed as per slab rates.

2. Exemption for Differently-Abled Individuals

• If an employee is blind, deaf, dumb, or orthopedically handicapped, they get a ₹3,200 per month (₹38,400 per year) exemption under both old and new tax regimes.

3. Reimbursement for Official Travel

• If an employer reimburses actual travel expenses incurred for official work, it is not taxable under both old and new tax regimes, provided proper bills and records are maintained.

Example:

If your employer gives you a fixed conveyance allowance of ₹5,000 per month (₹60,000 per year):

• Old Tax Regime: It was taxable unless proven to be for official duties.

• New Tax Regime: Fully taxable, even if used for commuting.

1. 4. Daily allowance received to meet the ordinary regular charges or expenditure you incur on account of absence from his regular place of duty.

Under the new tax regime, daily allowances granted to employees for being away from their regular place of duty are treated as follows:

1. Daily Allowance for Official Duty

• If the allowance is granted exclusively for official work (e.g., travel, fieldwork, temporary postings), it is exempt from tax to the extent of actual expenses incurred.

• The employee must maintain proof (bills, receipts, etc.) for any reimbursement claims.

2. Fixed Daily Allowance Without Proof of Expenses

• If an employer provides a fixed daily allowance, and it is not linked to actual expenses, it becomes fully taxable under the new tax regime.

3. Travel Allowance for Government Employees

• Daily allowances for travel (DA) provided to government employees are tax-exempt under Rule 2BB of Income Tax Rules, as long as they are reasonable and meant for official duty.

Example Cases:

1. Reimbursed Travel Expenses (Tax-Free)

   • An employee is sent for official training in another city, and the employer reimburses hotel and food expenses.

   • Since this is an actual reimbursement, it is not taxable.

2. Fixed Daily Allowance (Taxable)

   • An employer provides a fixed daily travel allowance of ₹1,000 per day, regardless of expenses incurred.

   • Since there’s no proof of actual expenses, the full amount is taxable.

Other than Salary Cases :

1. Individuals/ HUF having units in International Financial Service Center (IFSC), deductions u/s 80LA

2. Deduction U/s  10(15)(i) will still remain available for Post Office Saving Interest ( Rs 3500 for Individual Account Holder and Rs 7000 for Joint Account Holder).

3. Maturity Amount Received in LIC will be exempt U/s 10(10d).

4. Interest Accrued and maturity amount received in Sukanya Samridhi Yogana will still remain exempt.

5. Employer’s Contribution towards NPS, EPF or Superannuation fund will still remain exempt upto Rs 7.5 lac and any amount in excess of it will be taxable in employee’s hand.

6. Gift received up to Rs 5000 from employer will still remain exempt in the hands of employees. In excess of it will remain taxable.

If you receive a gift from your employer, its tax treatment depends on the value:

Gifts Up to ₹5,000 in a Financial Year

• Exempt from tax. 

• Includes vouchers, or physical gifts like gadgets, gold coins, etc.

Gifts Above ₹5,000 in a Financial Year

• The entire amount is fully taxable as per your salary slab rate under "perquisites" (Section 17 of the Income Tax Act).

• Example: If your employer gifts you a ₹10,000 smartphone, ₹5,000 is exempt, and the remaining ₹5,000 is added to your taxable salary.

Cash Gifts or Gift Vouchers (Any Amount)

• Fully taxable, even if below ₹5,000.

• No exemption applies.

7. Amount received on Leave Encashment will be Taxable if the employee continuous to be in service. otherwise (Retired / Resignation the allowance will be fully exempt for Government employees and exempt up to ₹25 lakh (increased from ₹3 lakh in Budget 2023) for Non-Government Employees.

8. Amount received on Voluntary Retirement Scheme will remain exempt up to Rs 5,00,000. 

Under the new tax regime (Section 115BAC), the amount received on Voluntary Retirement Scheme (VRS) follows these rules:

1. Exemption under Section 10(10C):

• VRS compensation is exempt up to ₹5 lakh under both the old and new tax regimes.

• This exemption applies only once in a lifetime for an individual.

• Any amount beyond ₹5 lakh is taxable as per the applicable slab rate.

2. Conditions for Exemption:

To claim the exemption, the VRS must be as per the prescribed guidelines, such as:

• The employee should have completed 10 years of service or be at least 40 years old.

• The scheme should apply to employees of a company, authority, PSU, or cooperative society.

3. Can You Claim Other Deductions on VRS Under New Regime?

• If you opt for the new tax regime, you cannot claim standard deductions, exemptions, or deductions under Chapter VI-A (like 80C, 80D, etc.).

• However, the ₹5 lakh exemption under Section 10(10C) is still allowed, as it is not part of Chapter VI-A.

4. VRS Received in Installments:

• If the VRS compensation is received in installments, the ₹5 lakh exemption applies only once, and any amount exceeding this in later years will be fully taxable.

9.  For Cooperative Society:- New section 115BAD has been introduced to provide taxability of resident co-operative Society at the rate of 22%. Surcharge @ 10% will be charged. No AMT liability will be imposed on those resident co-operative who opt for new tax regime. Option once exercised by the resident co-operative society can’t be withdrawn in the subsequent years.

In the case of a business income, an individual or HUF cannot claim set-off of the brought forward business loss or unabsorbed depreciation. The deductions not available under the new regime to the extent they relate to deductions/exemptions withdrawn.

• • Total Income exceeding Rs 50 lakhs but not exceeding 1 crore @ 10%

  • Total Income exceeding Rs 1 crore but not exceeding 2 crore @ 15%

  • Total Income exceeding 2 crore but not exceeding 5 crore @ 25%

  • Total Income exceeding Rs 5 crore @ 37%