Deductions Under New Tax Regime (FY 2025-26)

Deep Verified for FY 2025-26

The Complete Guide to
New Regime Deductions

Think the default New Tax Regime wipes out all your exemptions? Think again. Discover the hidden, legal deductions available to salaried individuals, professionals, and business owners to optimize your tax outgo.

Budget 2025 Tax Slabs

The tax slabs have been aggressively streamlined. Combined with the ₹60,000 Section 87A rebate, anyone with a net taxable income up to ₹12 Lakhs pays ZERO TAX.

If your Gross Salary is ₹12.75 Lakhs, Standard Deduction reduces it to ₹12 Lakhs. You pay ₹0 in tax!

Income Range	Tax Rate
Up to ₹4,00,000	Nil
₹4,00,001 to ₹8,00,000	5%
₹8,00,001 to ₹12,00,000	10%
₹12,00,001 to ₹16,00,000	15%
₹16,00,001 to ₹20,00,000	20%
₹20,00,001 to ₹24,00,000	25%
Above ₹24,00,000	30%

Every Active Deduction in FY 2025-26

We've mapped out every single tax-saving avenue remaining in the New Regime. Click or hover on the cards to explore.

💼 Core Salary Deductions

Automatic

₹75,000 Standard Deduction

Available to all salaried individuals and pensioners. No bills or proofs required. Automatically reduces your taxable income.

Sec 80CCD(2)

Up to 14% via Employer NPS

You can deduct employer contributions to your Tier-1 NPS account up to 14% of Basic + DA (applicable to both Private & Govt employees).

Tax-Free Perk

Employer EPF/Superannuation

Employer contributions to EPF, NPS, and Superannuation remain tax-free up to a combined limit of ₹7.5 Lakhs annually.

✈️ Allowances & Terminal Benefits

Terminal Exemptions Intact

• • Gratuity: Exempt up to ₹20 Lakhs (Sec 10(10)).
• • Leave Encashment: Exempt up to ₹25 Lakhs for non-govt employees (Sec 10(10AA)).
• • VRS: Voluntary Retirement Scheme compensation exempt up to ₹5 Lakhs.

Official Duty Allowances

• • Conveyance & Travel: Allowances spent for official travel remain exempt.
• • Daily Allowance: For expenses incurred on tour/transfer.
• • Divyangjan: ₹3,200/month transport allowance for specially-abled employees.

📈 Business, Property & Specials

For Businesses

Section 80JJAA

Business owners can claim a massive 30% deduction on additional employee wage costs for 3 consecutive years. Standard business expenses (rent, salaries, depreciation) are also fully allowed.

Pensioners

Family Pension

A deduction of ₹25,000 or 1/3rd of the pension (whichever is lower) is allowed. (Recently updated from ₹15,000).

Property & Def.

Home Loan & 80CCH

• Sec 24(b): Interest on home loan is allowed ONLY for let-out (rented) properties. Loss cannot be set off against salary.
• 80CCH: 100% deduction for Agniveer Corpus Fund.

Maturity proceeds from PPF, Sukanya Samriddhi (Sec 10(11)), and Life Insurance (Sec 10(10D)) remain entirely tax-free!

Intelligent Tax Optimizer

Simulate how structuring your salary saves you money in the new regime.

Gross Annual Salary (Basic + Allowances) ₹12,00,000

Basic Pay as % of Gross 50%

Usually 40-50% in standard structures.

Employer NPS Contribution 10%

Ask HR to allocate up to 14% of Basic to NPS.

Computation

Gross Salary ₹12,00,000

Less: Standard Deduction -₹75,000

Less: Employer NPS 80CCD(2) -₹60,000

Net Taxable Income ₹10,65,000

Total Tax Payable (Inc. Cess) ₹0

Since your taxable income is below ₹12L, you get full rebate under 87A. Enjoy zero tax!

Deductions NO LONGER Available

If you opt for the New Regime, you cannot claim these traditional Chapter VI-A and other deductions:

× 80C (PPF/ELSS)

× 80D (Health Ins.)

× HRA Exemption

× LTA

× Self-occ. Home Loan

× 80G Donations

× 80E Edu. Loan

× Prof. Tax

Quick Clarifications

Yes. While personal deductions (80C, 80D) are gone, all standard business expenses required to run your operation (salaries, rent, tech, 80JJAA) are fully deductible from business income.

Yes! The recent budget equalized this. Private sector employees can now claim up to 14% of their Basic Salary as employer contribution to NPS, matching government employees.

In the new regime, you cannot claim interest on self-occupied property. For let-out (rented) property, you can deduct interest from the rent received, but if it results in a net loss, that loss cannot be set off against salary or other income heads.