What deductions are allowed in the new tax regime? (India)

Quick Scoop: The new tax regime under Section 115BAC is now the default for individuals and HUFs, and from FY 2023-24 onward it allows only a limited set of deductions and exemptions.

I don’t have live access to detailed rule databases right now, so I’ll summarise the commonly accepted position as per recent Finance Acts and widely cited guides. For actual filing, always cross‑check with the latest official Income-tax notifications or a CA.

1. Big picture – how the new regime works

Under the new tax regime (Section 115BAC):

Tax slabs are lower than the old regime, but most deductions and exemptions are gone.
You can still opt for the old regime if it suits you better (subject to conditions, especially if you have business/professional income).
The new regime is the default ; you opt out if you want the old one.

Key idea: The government wants a simpler, low‑rate system with fewer tax breaks. You pay tax on a “clean” income number with only a few specified deductions allowed.

2. Deductions that are generally allowed in the new tax regime

Below are the deductions/reliefs that are typically allowed even if you choose the new regime (recent years). Exact amounts and technical conditions can change with each Budget, so treat this as a framework , not a legal final list.

2.1 Standard deduction from salary

A fixed standard deduction from salary income is allowed even under the new regime (recently raised from earlier limits; exact figure must be checked for the relevant FY).
This replaces older small allowances like transport allowance, etc., and is auto‑considered in Form 16 in most cases.

2.2 Employer contribution to NPS (Section 80CCD(2))

Employer’s contribution to your NPS Tier I account is allowed as a deduction (subject to percentage-of-salary caps and overall monetary ceiling).
This is over and above the standard deduction and is one of the key benefits that remains in the new regime.

2.3 Agniveer Corpus Fund contributions (Section 80CCH)

For eligible “Agniveer” personnel, contributions to the Agniveer Corpus Fund enjoy a specific deduction even if the new regime is chosen.
This is a special, targeted deduction and not a general taxpayer benefit.

2.4 Family pension relief

Family pension income (received by a family member of a deceased employee) gets a specific relief – a deduction up to a prescribed limit (historically the lower of a fixed rupee amount or a percentage of pension).
This relief is retained even under the new tax regime.

2.5 Interest on home loan for let‑out property (Section 24(b) – limited

context)

For self‑occupied property, interest deduction is generally not available in the new regime.
For a let‑out property, a limited form of interest set‑off/adjustment is still permitted against rental income (subject to caps and loss‑set‑off rules). It’s more a computation rule for house‑property income than a classic “80C style” deduction, but functionally it reduces your taxable income.

2.6 Interest on savings bank account (Section 80TTA / 80TTB – subject to

current rules)

A small deduction for interest on savings account (and, for senior citizens, certain deposit interest) has been periodically stated as being available even under the new regime in some analyses.
However, this has seen changes and interpretations; you should verify the latest position for the specific year before claiming.

3. Major deductions that are not allowed

This is where many salaried and middle‑class taxpayers get surprised. In the new tax regime, the following popular deductions and exemptions are generally NOT available :

Section 80C (PPF, EPF employee contribution, ELSS, life insurance premium, principal on housing loan, children’s tuition fees, etc.).
Section 80D (medical insurance premium for self/family/parents).
Section 80E (education loan interest).
Section 80G (most donations – except very specific cases in some years, so always recheck).
HRA exemption (House Rent Allowance).
LTA / LTC (Leave Travel).
Standard deduction for rent under old house‑property rules beyond what is embedded in new computation.
Most allowances like conveyance, professional tax deduction, etc.

In simple terms: almost all the “classic” savings‑linked and lifestyle‑linked deductions vanish, which is why many people still compare old vs new before choosing.

4. Quick view table – allowed vs not allowed (typical pattern)

Item	New Regime – Status	Notes
Standard deduction (salary)	Allowed	Fixed amount auto‑applied via employer/return for salaried/pensioners.
Employer NPS contribution (80CCD(2))	Allowed	Subject to % of salary and overall limit; powerful benefit for salaried taxpayers.
Agniveer Corpus Fund (80CCH)	Allowed (eligible Agniveers)	Special regime for Agniveer personnel only.
Family pension relief	Allowed	Specific deduction formula; reduces taxable family pension.
Home loan interest – self‑occupied	Not allowed	Big change vs old regime; no 2 lakh relief for self‑occupied.
Home loan interest – let‑out property	Partly allowed via computation	Interest can still adjust rental income subject to caps and loss‑set‑off rules.
80C (PPF, LIC, ELSS, etc.)	Not allowed	Most traditional tax‑saving investments lose tax benefit in new regime.
80D (health insurance)	Not allowed	Health cover remains important, but without tax incentive here.
80E (education loan interest)	Not allowed	Benefit only if you opt for old regime.
HRA exemption	Not allowed	No separate HRA relief even if you pay rent.
LTA / LTC	Not allowed	Leave travel concessions don’t get tax relief in new regime.
80G (donations)	Mostly not allowed	Except certain special‑case allowances in specific years; always re‑check.
Interest on savings a/c (80TTA/80TTB)	Year‑specific, check latest	Some guidance suggests limited deduction; confirm for your filing year.

5. How to decide: Old vs New regime

A simple way to think about it:

Add up all the deductions you normally claim under old regime:
- 80C, 80D, 80G, home loan interest (self‑occupied), HRA, etc.
See your effective taxable income in old regime vs in new regime (where you only get standard deduction + NPS employer + few special deductions).
Compare tax payable under both sets of slabs for the same financial year.

If you are:

A person with high deductions (big home loan, high 80C investments, health insurance, donations, etc.), old regime may still be better.
Someone with simple salary , no large investments or loans, and limited deductions, the new regime is often more attractive and easier.

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